Finance Minister Smt Nirmala Sitharaman presented India’s Annual Budget on July 23, 2024. Various tax related and other proposals were made in this budget. Below is the summary of Budget 2024 proposal impacting Non-Resident Indians ‘NRI’ (Indian Citizen living/working abroad), Foreign Citizen (PIOs, OCIs, Others), Seafarers and Expatriates.
In this budget, there is no change in the tax slab rates of the old regime. Changes in tax slab rates have been made in the new regime. A comparative chart of tax rates of FY 2023-24 (AY 2024-25) and FY 2024-25 (AY 2025-26) is given below.
Comparison of Tax Rates under Old Tax Regime & New Tax Regime
| Old Regime | New Regime | ||||||
| Current Tax Slabs (FY 2023-24) | Budget 2024 Proposed Tax Rates (FY 2024-25) | Current Tax Slabs (FY 2023-24) | Budget 2024 Proposed Tax Rates (FY 2024-25) | ||||
| Tax Slabs (FY 2023-24) (Rs) | Tax Rates | Tax Slabs (FY 2024-25) (Rs) | Tax Rates | Tax Slabs (FY 2023-24) (Rs) | Tax Rates | Tax Slabs (FY 2024-25) (Rs) | Tax Rates |
| <= 2.50 Lakh | Nil | <= 2.50 Lakh | Nil | <= 3 Lakh | Nil | <= 3 Lakh | Nil |
| 2.50 Lakh to 5 Lakh | 5% | 2.50 Lakh to 5 Lakh | 5% | 3 Lakh to 6 Lakh | 5% | 3 Lakh to 7 Lakh | 5% |
| 5 Lakh to 10 Lakh | 20% | 5 Lakh to 10 Lakh | 20% | 6 Lakh to 9 Lakh | 10% | 7 Lakh to 10 Lakh | 10% |
| >10 Lakh | 30% | >10 Lakh | 30% | 9 Lakh to 12 Lakh | 15% | 10 Lakh to 12 Lakh | 15% |
| 12 Lakh to 15 Lakh | 20% | 12 Lakh to 15 Lakh | 20% | ||||
| >15 Lakh | 30% | >15 Lakh | 30% | ||||
Analysis of New Slab Option
- There are no changes in tax rates in the Old Tax Regime
- In the New Tax Regime, benefits of deductions is not available. However, the same is available in the Old Tax Regime
- Regarding NRIs, New Tax Regime is always beneficial since usually NRIs do not make investments with the idea of availing tax deductions in India. Neither do they make any tax saving investments in India nor take housing loans for purchase of house property, etc. Accordingly, there is not much benefit of opting the old tax regime in case of NRIs. Hence, reduction of tax liability under the new tax regime is a beneficial budget proposal for NRIs, Non-residents.
Changes in Tax Rates In Property Sale Transactions By Non-Residents (NRIs, OCIs, Other Non-Residents)
Budget 2024 has amended the taxation of capital gain taxation on long term category property sale in India. In this budget, wef July 23, 2024 itself, tax rates on property sale is reduced to 12.50% (from erstwhile 20%). Though the tax rate on long term capital gain is reduced, however, indexation benefit has been taken away from long term property capital gain tax calculation. Hence, in relation to long term property capital gain taxation, taxation is simplified i.e. Tax rate @12.50% (plus applicable surcharge & cess) and no indexation. To understand it more clearly, a comparative study is given in table hereunder
| Prior to Budget 2024 | Post Budget 2024 (FY 2024-25 onwards) |
| – LTCG on property taxed @20% – Indexation benefit available | For transactions happened up to 22 July 2024 – LTCG on property taxed @20% – Indexation benefit available For transactions happening 23 July, 2024 onwards – LTCG on property @12.50% – No indexation benefit available |
Increase In Tax Rates on Capital Gains Arising On Shares, Mutual Funds
One major change made in this budget is increase of tax rates on capital gains arising from stock market. Proposed changes are as under:
Long Term Capital Gains (LTCG) Tax: 12.5% (from erstwhile 10%) for gains from listed equity shares, mutual funds held for more than one year.
Short Term Capital Gains (STCG) Tax: 20% (from erstwhile 15%) for gains from listed equity shares, mutual funds held for less than one year.
TDS Rates On Stocks, Mutual Funds Sale By NRIs: Accordingly, TDS rates are also changed on the sale of shares, mutual funds by Non-residents.
Budget Impact on NRIs: The above changes will increase the tax burden on NRIs. NRIs will have to more tax in India from their stock market profits. However, this tax will get set off against the tax liability they have to pay in their country of residence i.e. where they are Tax Resident. Hence, if the tax rates are more in their Tax Resident country, then this budget impact will be nil as they can claim DTAA relief for Indian tax liability in their Tax Resident country.
Revamp of the Income Tax Act
The Government is planning to revamp the Income Tax Act within the next six months with the objective of simplifying the tax code. This step is aimed at reducing the complexity of tax filings by 20%. Once it is implemented it will certainly benefit significantly to Non-residents (NRIs, OCIs) as they always look forward for simplified tax mechanism and least litigation. Only requisite for Non Resident is that they need to keep reporting their financial transactions, Non-resident status and other needful to tax authorities on regular basis (through ITR and other applicable reporting).
Real Estate Investment Prospects for NRIs
With significant increase in capital expenditure and launch of new infrastructure projects including innovative city projects, the real estate investment opportunities look promising for NRIs.
Revision in provisions of Black Money Act wrt Returning NRIs
Budget 2024 proposes to remove the penalty of Rs 10 lakh under section 42 and 43 of the Black Money Act if NRI fails to report any foreign assets (other than immovable property) where the aggregate value does not exceed Rs 20 lakh (increase from 5 Lakh Rs). Earlier, this limit was Rs 5 Lakh. This amendment will be effective from October 1, 2024. Hence, Returning NRIs, who miss to report their foreign bank account reporting in Indian ITR, will be relieved to the extent the balance maintained in the foreign bank account is less than Rs 20 Lakh.
Further, this exemption from penal provisions also applies to incorrect or non-reporting of such foreign assets.
Budget 2024 Usefulness For NRIs, Seafarers
Budget 2024 related above provisions are NRIs, Non-Residents, OCIs specific. It can help NRIs, in relation to their various questions like:
- What is in Budget 2024 in relation to NRIs, OCIs, other Non-Residents and Expatriates?
- What are the tax reducing or tax simplifying or tax increasing provisions in the Budget 2024 for Non-residents i.e. NRIs, OCIs, Seafarers?
- What is the impact of Budget 2024 on NRIs?
- A best NRI Tax Consultant in India who can advise in relation to Budget 2024 provisions?
NRI Tax, RBI Laws Services – Various Topics – By NRI Tax Service Consultants Company Team
- Returning NRIs Tax Laws, RBI Laws – NRI Tax Consultancy Services
- Repatriation of Money – NRO Account – NRI 15CA 15CB Services
- Taxation on Foreign Remittance by Residents Indian – TCS on LRS, Foreign Remittance
- Income Tax Return Services To NRIs, Non Residents In Delhi NCR, Bangalore, Mumbai, Kolkata, Chennai, Hyderabad, Pune, Chandīgarh, Punjab, Other Major Cities India