More Investment Options for NRIs

NRIs can cheer about the increase in the threshold limits and liberalisation
of the tax slabs. The new tax slabs will result in tax saving of around
Rs 45,000 for individuals having an income of more than Rs 5 lakh. Also
individuals will now not have to pay any tax on income up to Rs 1.5
lakh

An additional tax deduction of Rs 15,000 is also proposed for medical
insurance cover for parents.

NRIs will continue to enjoy exemption on the long-term capital gains
on which securities transaction tax (STT) has been paid.

Further, NRIs have the option of offering their investment income and
long-term capital gains income arising from specified assets to tax
at beneficial rates – 20% for investment income and 10% for long-term
capital gains.

However, the benefit of indexation or deductions under Chapter VI-A
are not allowed in computing such income.

Further, where appropriate taxes have been deducted at source from
these incomes, there is no requirement to file a tax return.

At present, NRIs are also allowed to maintain foreign currency (FCNR)
accounts & NRE accounts in India to invest in non-resident (non-repatriable)
rupee deposits and also in RBI-approved foreign currency deposits with
scheduled banks and claim tax exemption on income arising there from.

These provisions remain unchanged. Further, NRIs can freely repatriate,
outside India, their earnings in the form of interest, rent and dividend
received in India, without any additional tax burden subject to specific
conditions.

The introduction of Foreign Currency Exchangeable Bond (FCEB) may also
provide the NRIs with another avenue of investing in India.

The Budget provisions specifically exempt conversion of such bonds
into shares from capital gains tax.

Photo: Howrah Bridge view 01 by Indrajit Das, licensed under CC BY-SA 3.0, via Wikimedia Commons.