Media Release

Dubai, Mar 5: Kanara Entrepreneurs Ltd (KEL) Dubai organized a session on 'What's in for an NRI in the 2018 Indian Budget’ recently with renowned chartered accountant and past president of KE Bengaluru chapter, Mark D'Souza, as the resource person. The session provided a unique platform for NRIs in UAE to participate, interact and understand the implications of the budget and their responsibilities with respect to their responsibilities to direct and indirect taxes in India.

Mark started his presentation with the highlights of the Indian budget. While the biggest winners are the agricultural and healthcare sectors, the budget will have an indirect impact on the Non-resident Indians (NRIs), he stated. While there are minimal changes made specifically for the NRI overall, the repercussions of the new budget have several indirect impacts that all NRIs must be aware of, he said. Some of the policy changes to watch out if you are an NRI are given below.

Direct Tax

• Starting April 1, 2018, for any financial transaction over Rs 2.5 lac, every NRI will have to produce his PAN card.

• An NRI is still not eligible for Aadhaar card, which is restricted for residents.

• Budget 2018 has widened the scope of taxable presence of NRIs by moving from a ‘physical presence’ dominated nexus approach to a ‘significant economic presence’ nexus approach.

• No more cash payments exceeding the amount of Rs 10,000 from trusts and organizations.

• Capital gains on income of equity oriented mutual funds over Rs 1,00,000 will incur a 10% tax if long term, that is, if it’s held over one year.

• If as an NRI, you earn income in India over Rs 50,00,000, a surcharge of 10% will be levied. For over Rs one crore, a 15% surcharge will be charged.

• For NRIs who make an income on equity investments or equity linked savings schemes will now pay a 10% tax on that.

• Variation in sale consideration on sale of immovable property to its stamp duty value to the extent of 5% is to be ignored.

• It is proposed that the exemption under Section 54EC will be available only for sale of land and building or both and the lock in period is also increased from 3 to 5 years for investments in capital gains exemption bonds made after 1st April 2018.

• Prosecution for failure to furnish return - if a person willfully fails to furnish the return of income within due time (if tax payable by him/her is more than Rs 3000), he/she shall be punishable with imprisonment and fine with effect from April 1, 2018.

• Fine and imprisonment is proposed to be levied to companies who have not filed return of Income within due date even if the tax payable by company does not exceed Rs 3,000.

• Cryptocurrency is not acceptable in India.

Import and Customs

• Customs duty on mobile phones, perfumes, dental hygiene, after shave, deodorants and room fresheners to be hiked to 20%.

• This 20% hike will also apply to imitation jewelry, sunglasses, cigarette lighters, smart watches, wearable devices toys and furniture.

• Any import of LCD/LED/OLED panels and other parts of TVs will have an import duty of 15%.

• Import of solar cells and tempered glass for solar cell manufacture will be exempted from customs duty.

For Parents of NRIs

• Medical expense deduction is increased to Rs 50,000 and Rs one lac for certain illnesses – However, this deduction is available only for residents and not for non-residents.

• The first Rs 50,000 will be tax exempted for interests accrued from bank and post office saving accounts.

• Senior citizen limit for interest bearing LIC schemes is now Rs 15 lacs.

It will be interesting to see how these play out in the next year and how much of it will really bear an impact on the NRI.

The talk was followed by question and anwer session.

Ivan Fernandes introduced the speaker to the audience. Robert D’Sa proposed the vote of thanks.