NRI Taxes in Budget 2007
India's latest budget has little to offer to NRI investors. If anything, the tax burden on them has only gone up.
More Indians are paying more taxes, the economy is growing at over nine percent, exports are booming and foreign reserves have touched a new record of $180 billion. So Finance Minister P. Chidambaram focused on the poor to lower prices, provide better education and healthcare, offer selected insurance cover and improve infrastructure.
However, NRIs, like all Indians, will pay less income tax but also get lower returns on Indian stocks.
NRIs who file income tax returns in India will benefit marginally as the tax exemption has been raised by Rs.10,000 to Rs.110,000; to Rs 145,000 for women and Rs.195,000 for senior citizens. However, the education cess has increased from two percent to three percent on all direct and indirect taxes to finance higher education.
NRI tenants occupying any property for commercial use will now have to pay service tax of 12.5 percent. This increases their cost of doing business in India. NRI landlords will not be affected, as they will collect this service tax from their tenants.
The budget did not make any provisions for greater individual real estate investment. To attract NRIs to invest in real estate, the stamp duty should be uniform across the country and reduced considerably. NRIs remit funds through legitimate banking channels and so they are at a disadvantage when the seller demands the majority of the price in cash as the sale price is a fraction of the total price paid for a property. This will bring down, if not stop, cash changing hands when buying and selling property that is commanding steep prices in India today. Since this is not strictly a budgetary provision, the finance minister can issue guidelines to the state governments on this matter.
NRI promoters can enjoy a five-year tax holiday if they invest in economy hotels and convention centres in and around Delhi provided that these facilities are completed before March 2010 in time for the Commonwealth Games in the capital.
NRI promoters may also be taxed depending on their country of residence and its tax treaties with India. If an NRI takes over an infrastructure company through merger or acquisition, he/she will lose the exemption benefit granted earlier.
NRIs can heave a sigh of relief that their cash withdrawals under Rs.50,000 will not be notified to the authorities. To keep track of cash transactions and 'black money', a banking cash transaction tax was introduced last year for all cash withdrawals above Rs.25,000 and these transactions were reported to the Financial Intelligence Unit. This led the Income Tax Department to many money-laundering and 'hawala' transactions. This year, the limit of withdrawals has been raised to Rs.50,000.
The budget follows the old saying, "If it's working, don't fix it". India is progressing well so the poor should benefit. And NRIs are welcome to contribute - without VIP treatment.
Source: mangalorean.com
More Indians are paying more taxes, the economy is growing at over nine percent, exports are booming and foreign reserves have touched a new record of $180 billion. So Finance Minister P. Chidambaram focused on the poor to lower prices, provide better education and healthcare, offer selected insurance cover and improve infrastructure.
However, NRIs, like all Indians, will pay less income tax but also get lower returns on Indian stocks.
NRIs who file income tax returns in India will benefit marginally as the tax exemption has been raised by Rs.10,000 to Rs.110,000; to Rs 145,000 for women and Rs.195,000 for senior citizens. However, the education cess has increased from two percent to three percent on all direct and indirect taxes to finance higher education.
NRI tenants occupying any property for commercial use will now have to pay service tax of 12.5 percent. This increases their cost of doing business in India. NRI landlords will not be affected, as they will collect this service tax from their tenants.
The budget did not make any provisions for greater individual real estate investment. To attract NRIs to invest in real estate, the stamp duty should be uniform across the country and reduced considerably. NRIs remit funds through legitimate banking channels and so they are at a disadvantage when the seller demands the majority of the price in cash as the sale price is a fraction of the total price paid for a property. This will bring down, if not stop, cash changing hands when buying and selling property that is commanding steep prices in India today. Since this is not strictly a budgetary provision, the finance minister can issue guidelines to the state governments on this matter.
NRI promoters can enjoy a five-year tax holiday if they invest in economy hotels and convention centres in and around Delhi provided that these facilities are completed before March 2010 in time for the Commonwealth Games in the capital.
NRI promoters may also be taxed depending on their country of residence and its tax treaties with India. If an NRI takes over an infrastructure company through merger or acquisition, he/she will lose the exemption benefit granted earlier.
NRIs can heave a sigh of relief that their cash withdrawals under Rs.50,000 will not be notified to the authorities. To keep track of cash transactions and 'black money', a banking cash transaction tax was introduced last year for all cash withdrawals above Rs.25,000 and these transactions were reported to the Financial Intelligence Unit. This led the Income Tax Department to many money-laundering and 'hawala' transactions. This year, the limit of withdrawals has been raised to Rs.50,000.
The budget follows the old saying, "If it's working, don't fix it". India is progressing well so the poor should benefit. And NRIs are welcome to contribute - without VIP treatment.
Source: mangalorean.com
posted by praveen @ 9:25 PM
0 Comments:
Post a Comment
<< Home