As the Budget speech comes to an end, we list down the quick takeaways for Non Resident Indians (NRIs). We will continue to bring you detailed analyses as finer aspects of the Finance Bill trickle in.
Measure: The government of India will now allow qualified foreign investors access to the Indian corporate debt market. Qualified foreign investors, or QFIs, can be individuals, groups or associations based abroad.
Impact: This proposal, when implemented will deepen the country's shallow bond market and also open up a lucrative avenue for foreign individual investors who are keen to participate in India's growth story. But, NRIs will hope for something more. On paper, NRIs were always permitted to invest in Indian corporate bonds. However, it required the issuing companies to enable the option for NRI investors with specific permission with the Reserve Bank of India. Often, companies chose not to do so, restricting access to NRIs. It is hoped that this move will also improve access for NRIs in the corporate bond market.
Measure: To introduce mandatory foreign asset reporting; income tax body to have powers to open previous returns of up to 16 years to check for tax evasion
Impact: While the intention of this proposal is to bring to book all those who have been evading taxes by stashing their money abroad, one fears that it will create unnecessary reporting requirements and needless harassment for NRIs who have returned to India after a long stint abroad.
Measure: Tax slabs have been changed to the following: Up to Rs 2 lakh: NIL (earlier Rs 1.8 lakh) Rs 2-5 lakh: 10% Rs 5-10 lakh: 20% (earlier Rs 5-8 lakh) Above Rs 10 lakh: 30% (earlier above 8 lakh)
Impact: For NRIs, as for all resident Indians, the tax liability will come down. A tax reduction of up to Rs 22,000 is likely on income of Rs 10 lakh.
Measure: The Direct Tax Code (DTC) which was expected to be implemented from April 2012, has been deferred for now
Impact: This might come as a relief for NRIs as some of the provisions of the DTC were quite harsh. For instance, under the proposed DTC, any individual (including NRIs/PIO) will become resident, if they are present in India for 60 days or more in the financial year and 365 days or more over a period of four years prior to the financial year and would be liable to pay taxes on their global income. This proposal would have impacted all those NRIs who visited India frequently for personal or business purposes.
Measure: To allow electronic voting for shareholders
Impact: If the Government allows electronic voting, this will help NRI shareholders to participate more actively
Measure: Gold purchases in India to become expensive; customs duty doubled
Impact: If keeping your money in India in the form of gold has been a favorite avenue, that might just change. Gold will become more expensive as the FM doubled customs duty.
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