Insights for NRIs: Union Budget 2019

The Indian finance minister Ms. Nirmala Sitharaman presented the first budget of the Modi 2.0 government on 5th July, 2019. In this article, we shall focus on the high points of the budget relevant to non- residents and the points to be mindful of while filing the return of income for the financial year ended 31st March, 2019.
Changes in taxation norms as per Union Budget 2019
A new section, 80EEA has been introduced to provide a deduction upto INR 1,50,000 for interest paid on housing loan taken from a financial institution to by buy or construct a home that qualifies under the “Affordable Housing” scheme. The following conditions will have to be satisfied in order to claim the deduction:
This deduction would be in addition to the deduction of INR 2,00,000 already available under another section.
Total income exceeding INR 5 million but less than INR 10 million |
10% of tax |
Total income exceeding INR 10 million but less than INR 20 million |
15% of tax |
Total income exceeding INR 20 million but less than INR 50 million |
25% of tax |
Total income exceeding INR 50 million |
37% of tax |
These new rates of surcharge are applicable to the current financial year (2019-20).
Changes in Tax Return forms for A.Y 2019-20 (F.Y. 2018-19)
ITR 2 |
For Individuals (other than resident and ordinarily resident individuals) and HUFs not having income from profits and gains of business or profession |
ITR 3 |
For individuals and HUFs having income from profits and gains of business or profession |
Non tax related changes impacting NRIs:
Apart from the changes in the taxation norms, the Union Budget, 2019, also proposes to consider issuing Aadhaar cards to NRIs holding Indian passports upon their return to India without waiting for 180 days. This would quicken the KYC process for NRIs and enable them to use their Aadhaar card to expedite financial transactions in the country.
In her budget speech, the FM also spoke about merging the NRI-Portfolio Investment Scheme Route with the Foreign Portfolio Investment Route. While this has yet to be actioned out, if this happens, it will be a boon for NRIs as there has been a growing demand for this merger.
Finally, an interesting investment related development for NRIs is the focus of the government on International Financial Services Centres (IFSC). There is already an existing exemption for interest earned by non-resident in India under Income Tax Act,1961 on deposit placed with an “offshore banking unit” in a Special Economic Zone (like the GIFT City in Gujarat). So, if you already have a deposit with Kotak Mahindra Bank’s set up in the GIFT City, the interest on that is exempt in the hands of non-resident in India under Income Tax Act,1961. Now, a similar exemption is granted to interest earned by an non-resident in India under Income Tax Act,1961 on money lent by e him to a unit located in an IFSC on or after 1st September, 2019. Both these exemptions provide a unique and attractive investment opportunity to NRIs.
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By clicking on the hyper-link, you will be leaving www.kotak.com and entering website operated by other parties. Kotak Mahindra Bank does not control or endorse such websites, and bears no responsibility for them.
By clicking on the hyper-link, you will be leaving www.kotak.com and entering website operated by other parties. Kotak Mahindra Bank does not control or endorse such websites, and bears no responsibility for them.
By clicking on the hyper-link, you will be leaving www.kotak.com and entering website operated by other parties. Kotak Mahindra Bank does not control or endorse such websites, and bears no responsibility for them.
By clicking on the hyper-link, you will be leaving www.kotak.com and entering website operated by other parties. Kotak Mahindra Bank does not control or endorse such websites, and bears no responsibility for them.