As a non-resident Indian, it may be unfortunate if one had to pay tax twice. Considering they may be paying tax in the country where they are currently earning. That would be in addition to paying tax in India where the NRI might have assets, investments, or business transactions making them liable to pay tax to the Indian Tax Authorities as is the case for any income earned in the country.
The nearly 3 crore NRI community holds a significant space in the Indian economy. India is the world's largest recipient of remittances with inflows of nearly $90 billion recorded in 2021. Needless to say, the government should ensure 'Ease of investing' for this community. NRIs largely invest in financial products and real estate in India.
The forthcoming Budget is crucial in terms of government reforms and we expect them to announce steps to encourage NRI investment in the country. As Finance Minister Nirmala Sitharaman and her team gear up to present the all-important Union Budget 2022, below shared are a few thoughts and suggestions that will help boost investments by NRIs in real estate and financial assets in India.
Ease of investing for NRIs
Given their interest in bringing their earnings to India, the NRI community expect the government to reward them with sops such as ease of compliance under the Income-Tax Act, reduction in withholding tax rates, and concessions among other relaxations. These measures will help boost inflows of forex, a situation every country prefers. There is a clear indication for India to move to the third spot globally on forex/GDP size (behind USA and China) from the current 7th position by 2030.
This can only be made possible with a focus on the development of the country in driving investments, providing appropriate direction with top-notch governance, and making India the first port of call for foreign investors.
Boost to rental housing
The real estate market in India has become even more lucrative for NRIs in the recent past as a result of the increased transparency due to RERA and ease in investment norms. For NRI investors who own or intend to purchase more housing properties in their country of origin, a higher standard deduction for Rental housing would be very lucrative as rental housing represents a huge potential for investments. Retail investors expect greater incentives, enhanced tax benefits for rental housing, and access to low-cost credit to buy homes. This will be hugely beneficial for NRIs looking to buy homes for retirement purposes in the future.
We expect the government to continue promoting the affordable rental housing schemes by announcing tax reliefs for rental housing projects, which will thereby fast-track the pace of investments in this segment.
In an effort to boost the focus on innovations and digitization within real estate and to make the sector future-ready, the sector is likely to witness an increased capital outlay with few tax relaxations, to further the agenda of providing affordable and rental housing. GST waivers for under-construction properties and other incentives will help attract investments.
(The writer is Founder, and CEO of Millwood Kane International-investment consulting company)
