What NRIs can expect from the Indian budget

The Indian pre-budget (2022–26) meetings with the various ministries are likely to commence in mid-October 2024. The consultations, a significant part of the budget exercise, are likely to be completed by November, and the draft will be finalized by December or early January 2025. The Union Budget for 2025–26 will be presented in Parliament in February 2025.

Therefore, this is the most appropriate time to highlight certain pending demands of the Indian diaspora living abroad. It is estimated that more than 35 million Indians are living abroad. The inward remittance in 2023 was the highest among all countries globally and was ranked only second to export receivables.

The NRIs were not happy with the announcements in the budget presented in July 2024. Barring the cut in basic customs duty on gold and mobile accessories, the abolition of angel tax, and the measures to boost the NRI investments in India, the expectations of a major chunk of NRIs were not met.

The blue-collar segment among NRIs has long demanded a comprehensive social security scheme under one umbrella, having been disappointed by existing schemes that have not benefited them for various reasons. A comprehensive scheme covering pension, health insurance, family welfare, children's education, resettlement, etc. is needed to ensure a decent life after repatriation or retirement.

Secondly, there is a differential treatment of NRIs concerning popular small savings schemes of the government, namely the Public Provident Fund, Sukanya Deposit Scheme for girl children, Senior Citizen Deposit Scheme, etc. NRIs are also not allowed to invest in the Sovereign Gold Bond Scheme (SGB), a very popular scheme. When the NRIs are allowed to invest in the Central (CGS) and state government securities (SDL) through the online platform of RBI, viz., RBI Retail Direct, the government may consider suitable changes in the FEMA Act in this regard.

There is also large-scale discrimination in respect of the income tax laws applicable to the NRIs. Many deductions allowed to the residents are not passed on to NRIs. A higher rate of Tax Deducted at Source (TDS) of 30 percent plus 4 percent cess, an effective rate of 31.20 percent, needs a review. The above rate of 31.20 percent is applicable irrespective of the income of the NRI. An NRI having a domestic income of say Rs 100,000 is required to pay TDS of Rs 31,200. Most of the NRIs are neither aware of this nor their working environments permit them to file IT returns and get refunds. In effect, the NRIs are not entitled to a refund.

FILE PHOTO: India's Finance Minister Nirmala Sitharaman holds up a folder with the Government of India logo, as she leaves her office to present the federal budget in the parliament in New Delhi

Currently, NRIs are required to file Form ITR2, which is complicated; instead, a simplified form is to be made available to them to encourage the filing of tax returns. Also, upon permanent repatriation, they may be permitted to continue their ‘NRI status’ on their existing fixed deposits till maturity.

The exorbitant fares by airlines, particularly during the festive season and the school vacation periods, require urgent intervention of the Indian government. Though this issue has been brought to the notice of the authorities on several occasions, no fruitful steps have been taken to date. As a result, many NRIs are unable to visit their home country for family engagements or other exigencies.

This is not an exhaustive list. There are other issues as well. It is worthwhile to mention that during 2023, NRIs have remitted over $115 billion to India, which is the highest among all the countries of the world. As Indian citizens, NRIs are also deserving of equitable treatment.