Finance Minister Smt Nirmala Sitharaman presented her 8th consecutive India’s Annual Budget on Feb 1, 2025. She proposed various tax and other proposals in this budget. Hereunder is a summary of Budget 2025 proposals, which has direct or indirect impact on Non-Resident Indians ‘NRI’ (Indian Citizens living/working abroad), Foreign Citizens (PIOs, OCIs, Others), Seafarers, Expatriates, and other Non-Residents.
Amendments In Tax Rates and Tax Slabs – Applicable For FY 2025-26 (i.e. AY 2026-27 ITR)
There are two Tax Regimes effective as on today i.e. Old Regime and New Regime. In Old Regime there is an option to claim various deductions as per their applicability. In the New Regime, barring a few, there is no tax deduction available. However, Tax rates are beneficial under the New Tax Regime.
In this budget, there is no change in the tax rates or tax slab under the old regime. However, Significant welcome Changes, specifically for NRIs, OCIs, have been made in tax rates as well slabs under the New Tax Regime. This is a consecutive another change in the New Tax Regime after last budget of July 2024. It is also important to understand here that for Non-Residents (i.e. NRIs, OCIs, Seafarers, etc), the New Tax Regime is very much beneficial as their claim for deductions is generally either nil or very little due to their working and living outside India.
Further, for a better understanding a comparative chart of tax rates, hereunder is a summary of Tax Rates and Slabs under Old Regime as well New Regime for the latest three years i.e. FY 2023-24 (AY 2024-25), FY 2024-25 (AY 2025-26) and FY 2025-26 (AY 2026-27) is given below.
3 Years Comparison of Tax Rates under Old Tax Regime
| Tax Slabs (FY 2023-24) | Tax Slabs (FY 2024-25) | Budget 2025 Proposed Tax Rates (FY 2025-26) | |||
| Tax Slabs (FY 2023-24) (Rs) | Tax Rates | Tax Slabs (FY 2024-25) (Rs) | Tax Rates | Tax Slabs (FY 2025-26) (Rs) | Tax Rates |
| <= 2.50 Lakh | Nil | <= 2.50 Lakh | Nil | <= 2.50 Lakh | Nil |
| 2.50 Lakh to 5 Lakh | 5% | 2.50 Lakh to 5 Lakh | 5% | 2.50 Lakh to 5 Lakh | 5% |
| 5 Lakh to 10 Lakh | 20% | 5 Lakh to 10 Lakh | 20% | 5 Lakh to 10 Lakh | 20% |
| >10 Lakh | 30% | >10 Lakh | 30% | >10 Lakh | 30% |
| Govt is trying to shift the taxpayer from the Old regime to the new Tax regime, hence, they are not proposing any changes in the Budget for the Old regime since the last few Budgets.For the sake of information, this is hereby to clarify that under the Old regime taxpayer can avail benefit of various tax deductions i.e. Sec 80C, 80D, House loan interest, various other deductions. However, considering the difference of tax under the new Tax Regime, even after claiming deductions New tax regime provides better options to assessee. Hence, the Old tax regime is not attractive and relevant for assessee specifically NRIs, OCIs. | |||||
3 Years Comparison of Tax Rates under New Tax Regime
| New Regime | |||||
| Current Tax Slabs (FY 2023-24) (AY 2024-25) | Current Tax Slabs (FY 2024-25) (AY 2025-26) | Budget 2025 Proposed Tax Rates (FY 2025-26) (AY 2026-27) | |||
| Tax Slabs (FY 2023-24) (Rs) | Tax Rates | Tax Slabs (FY 2024-25) (Rs) | Tax Rates | Tax Slabs (FY 2025-26) (Rs) | Tax Rates |
| <= 3 Lakh | Nil | <= 3 Lakh | Nil | <= 4 Lakh | Nil |
| 3 Lakh to 6 Lakh | 5% | 3 Lakh to 7 Lakh | 5% | 4 Lakh to 8 Lakh | 5% |
| 6 Lakh to 9 Lakh | 10% | 7 Lakh to 10 Lakh | 10% | 8 Lakh to 12 Lakh | 10% |
| 9 Lakh to 12 Lakh | 15% | 10 Lakh to 12 Lakh | 15% | 12 Lakh to 16 Lakh | 15% |
| 12 Lakh to 15 Lakh | 20% | 12 Lakh to 15 Lakh | 20% | 16 Lakh to 20 Lakh | 20% |
| >15 Lakh | 30% | >15 Lakh | 30% | 20 Lakh to 24 Lakh | 25% |
| >24 Lakh | 30% | ||||
Analysis of New Slab Option
- There are no changes in tax rates in the Old Tax Regime. However, some major beneficial changes are made in the New Tax Regime, as can be seen in the above tables.
- In the New Tax Regime, benefits of deductions is not available. However, the same is available in the Old Tax Regime.
- Non Residents are eligible for both the Tax Regimes Old as well New. However, as discussed above, for Non-Residents (NRIs, OCIs, etc), New Tax Regime is a better option to save taxes as NRIs do not make investments or payments in India which attract Tax Deductions. Also, it attract less litigation under the New Tax Regime which avoids verification of deductions from the department. Hence, the proposed increase in tax slabs and changes in tax rates is a welcome budget proposal for NRIs, Non-residents.
- Also to be noted, that after Budget 2025 proposal there will be no point to opt for the Old Regime as even after claiming various kinds of deductions, tax payable will be low under the New Tax Regime.
- Benefits which is available to NRIs, OCIs if they file their tax return under New Tax Regime in FY 2025-26 (AY 2026-27) comparison of tax payable in FY 2023-24 (AY 2024-25) and FY 2024-25 (AY 2025-26).
Tax Amount and Benefit Under Proposed Tax Structure Vs Earlier Year
| Income (Rs) | Tax (FY 2023-24) (A) | Tax (FY 2024-25) (B) | Tax (FY 2025-26) (‘C) | Tax Benefit (A-C) (FY 25-26 Vs FY 23-24) | Tax Benefit (B-C) (FY 25-26 Vs FY 23-24) |
| 4 Lakhs | 5,000 | 5,000 | – | 5,000 | 5,000 |
| 5 Lakhs | 10,000 | 10,000 | 5,000 | 5,000 | 5,000 |
| 6 Lakhs | 15,000 | 15,000 | 10,000 | 5,000 | 5,000 |
| 7 Lakhs | 25,000 | 20,000 | 15,000 | 10,000 | 5,000 |
| 8 Lakhs | 35,000 | 30,000 | 20,000 | 15,000 | 10,000 |
| 9 Lakhs | 45,000 | 40,000 | 30,000 | 15,000 | 10,000 |
| 10 Lakhs | 60,000 | 50,000 | 40,000 | 20,000 | 10,000 |
| 11 Lakhs | 75,000 | 65,000 | 50,000 | 25,000 | 15,000 |
| 12 Lakhs | 90,000 | 80,000 | 60,000 | 30,000 | 20,000 |
| 15 Lakhs | 1,50,000 | 1,40,000 | 1,05,000 | 45,000 | 35,000 |
| 16 Lakhs | 1,80,000 | 1,70,000 | 1,20,000 | 60,000 | 50,000 |
| 20 Lakhs | 3,00,000 | 2,90,000 | 2,00,000 | 1,00,000 | 90,000 |
| 24 Lakhs | 4,20,000 | 4,10,000 | 3,00,000 | 1,20,000 | 1,10,000 |
| 50 Lakhs | 12,00,000 | 11,90,000 | 10,80,000 | 1,20,000 | 1,10,000 |
| Surcharge and Cess is not calculated in above which will be extra. | |||||
- Hence, from the above table it can be seen that if taxable income exceeds Rs 24 Lakh, then the benefit provided under this budget is Rs 1.10 Lakh. If 4% Education Cess is also added in that then the benefit will be Rs 1.144 Lakh Rs. And in the case of surcharge applicability, as per the surcharge rate, the benefit will further increase according to the surcharge rate multiplied by 1.10 Lakh. Hence, for higher income bracket NRIs, OCIs, this budget provided the benefit of Rs 1.10 Lakh plus surcharge & cess.
Abolition of TCS on Remittances From India For Education
Budget 2025 proposed to remove TCS (Tax Collection At Source) on remittances from Indian bank account to foreign bank account for Education purposes. This is the very welcome proposal for students going abroad for education purposes as their lot of money were getting stuck in India in the form of TCS on Remittances. This money could have been claimed back by filing ITR in the next year, however, for the time being funds were used to get blocked with the tax department. Now, with the removal of TCS on remittances for education purposes, students will have more money for their education purposes abroad. However, this waiver is for those remittances for education purposes, where remittance is made out of Education Loan taken from specified Financial Institutions.
Budget 2025 Usefulness For NRIs, Seafarers
The above information on Budget 2025 provisions are helpful for NRIs, Non-Residents, OCIs specifically, in relation to their various questions as under:
- What are the changes in tax slabs proposed in Budget 2025 for Non Residents, NRIs, OCIs, and Expatriates?
- What are major Budget proposals for NRIs in India’s Annual Budget 2025?
- Impact and Implications of Budget 2025 on NRIs, Non Residents?
- What is the impact of Budget 2025 on NRIs?
- NRI Tax Consultant in Delhi, Mumbai, Bangalore, Chennai, Other parts of India who can advise in relation to Budget 2025 provisions?
NRI Tax, RBI Laws Services – Various Topics – By NRI Tax Service Team Team
- NRI Lower TDS Certificate Services In Delhi, Mumbai, Bangalore, Other Cities
- 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