Key Highlights for NRIs on Union Budget 2024

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Key Highlights for NRIs on Union Budget 2024

The Indian Union Budget 2024, presented by Finance Minister Nirmala Sitharaman on July 23, 2024, was a highly anticipated financial event with global attention. It introduced significant changes affecting both residents and Non-Resident Indians (NRIs), particularly in capital gains tax and property regulations.

Key Changes Impacting NRIs:

  1. Higher TDS on Capital Gains:
    • Long-Term Capital Gains (LTCG) Tax: Increased from 10% to 12.5% for listed equities held over a year.
    • Short-Term Capital Gains (STCG) Tax: Increased from 15% to 20% for listed equities held less than a year.
  2. Income Tax Act Revamp:
    • The government plans to overhaul the Income Tax Act within six months, aiming to simplify the tax code.
    • RBI reports this revamp aims to reduce tax filing complexity by 20%.
  3. New Tax Slabs:
    • Introduced new income tax slabs with rates ranging from 0% to 30%.
    • Standard deduction increased from INR 50,000 to INR 75,000 under the new tax regime.
  4. Enhanced Pension Savings:
    • Employer contribution limit under Section 80CCD(2) increased from 10% to 14% of salary for all employees.
  5. Property Tax Regulations:
    • Any property sale above INR 50 lakh will incur TDS, regardless of how the sale value is split.
  6. Real Estate Investment Prospects:
    • Increased funding for innovative city projects presents new investment opportunities.

NRI Sentiment:

Despite high expectations due to significant remittances (over INR one lakh crores last year), many NRIs feel their long-standing concerns weren’t adequately addressed. While some provisions were welcomed, there’s disappointment over unaddressed issues like social security measures and high airfares.

Conclusion:

The Union Budget 2024 introduces both opportunities and challenges for NRIs. While offering growth potential through new pension plans and smart city investments, it also complicates financial planning with tightened regulations. NRIs must stay informed and adaptable to navigate these changes effectively.

FAQs:

1. How does the 2024 budget affect NRI capital gains tax?
Ans- The budget increased LTCG tax from 10% to 12.5% and STCG tax from 15% to 20% on listed equities.

2. What changes were made to the income tax slabs?
Ans- New tax slabs were introduced with rates ranging from 0% to 30%, and the standard deduction was increased to INR 75,000.

3. How does the budget impact NRI property transactions?
Ans- Any property sale above INR 50 lakh will now incur TDS, regardless of how the sale value is split.

4. What pension-related changes affect NRIs?
Ans- The employer contribution limit under Section 80CCD(2) was increased from 10% to 14% of salary for all employees.

5. How did NRIs generally react to the budget?
Ans- While some provisions were welcomed, many NRIs felt disappointed that long-standing concerns weren’t adequately addressed.

6. How might the Income Tax Act changes affect NRIs?
Ans- The planned revamp of the Income Tax Act aims to streamline tax filing, potentially easing compliance for NRIs with Indian tax laws.

7. What new investment options does the budget present for NRIs?
Ans- The budget allocates increased funding for smart city projects, opening up fresh real estate investment possibilities for NRIs.

8. What’s the impact of new TDS rules on NRI property transactions?
Ans- Any property sale exceeding INR 50 lakh will now incur TDS, regardless of how the sale value is split.

9. Did the budget address NRI concerns about travel costs and social security?
Ans- The budget didn’t specifically tackle issues related to high airfares or social security for NRIs.

10.How can NRIs leverage the new pension savings provisions?
Ans- NRIs can take advantage of the increased employer contribution limit under Section 80CCD(2), which now allows for contributions up to 14% of salary to pension plans.

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