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The introduction of the Indian Union Budget 2024 by Finance Minister Nirmala Sitharaman on July 23 was one of the year’s major financial events. The budget promised major changes affecting both Indian residents and non-residents, catching global attention.
Major capital gains tax modifications were announced, which had a direct impact on NRI tax payments. Furthermore, new property tax regulations aim to simplify compliance for NRIs who own property in India, providing a more simplified approach to asset management. As we go deeper into these developments, it is critical to grasp their consequences for NRIs in the future year. Meanwhile, if you are looking to visit India for your vacation, you can book cheap tickets to India from Canada through Tripbeam for a smooth trip.
The Union Budget 2024 introduces a substantial increase in Tax Deducted at Source for capital gains on assets such as listed equities. This adjustment, intended to enhance tax collection efficiency, directly affects NRI tax obligations by raising their immediate tax liabilities.
The Reserve Bank of India has revealed substantial rises in TDS rates:
Long-Term Capital Gains Tax: Increased from 10% to 12.5% for profits on listed equities held for over a year.
Short-Term Capital Gains Tax: Raised from 15% to 20% for profits on listed equities held for under a year.
This move intends to create a more equitable tax structure for residents and NRIs. Though the action aims to maintain equity, NRIs will probably face higher expenses as a result. The rising tax liabilities may cause NRIs to reconsider their investing methods and diversify their assets. For those planning trips, consider booking cheap Business class flight tickets to India to manage your travel in comfort amidst these financial changes.
The administration has promised a comprehensive change of the Income Tax Act, which will be implemented within the next six months. This reform attempts to streamline the tax legislation, which could have a substantial impact on how NRIs report and pay taxes.
Staying updated on these changes is essential for NRIs to adjust their financial strategies accordingly. The RBI indicates that the revamp is expected to reduce tax filing complexities by 20%.
These changes aim to reduce the tax burden by raising income thresholds for lower tax rates and adding new deductions, thus offering relief to taxpayers.
The Budget featured new income tax slabs and rates, which changed the previous structure.
New Tax Slab
Old Tax Slab
The standard deduction has been raised from INR 50,000 to INR 75,000 in addition to these new slabs. While the increased standard deduction provides some comfort, the altered tax slabs may complicate tax planning for NRIs.
The increased deduction could help ease financial pressure, but the new tax structure might require NRIs to adjust their financial strategies to effectively manage their tax liabilities under the new regime.
The latest budget has introduced stricter property tax regulations that significantly impact NRIs. A key change is the updated Tax Deducted at Source (TDS) rule for property transactions. Previously, sellers could avoid TDS by splitting the sale value of their property.
Now, any property sale exceeding INR 50 lakh will be subject to TDS, regardless of how the sale value is divided. This change aims to simplify the tax process and enhance compliance.
Although the change aims to curb tax cheating, it may complicate property transfers and discourage investment in the Indian real estate sector.
The Union Budget 2024 has introduced significant changes to the National Pension System that will be beneficial for NRIs. The key change is that the maximum company contribution under Section 2 has been increased from 10% to 14% of the salary (basic plus dearness allowance) for all employees, including those in the private sector.
This enhancement makes NPS more attractive for NRIs as it provides them with more opportunities for tax savings and increased retirement benefits, enabling them to maximize their retirement savings while taking advantage of tax benefits.
The Union Budget 2024 highlights promising real estate investment opportunities for NRIs. With a significant increase in capital spending and the launch of new infrastructure projects. The Indian property market is ripe for growth.
Increased funding for innovative urban development projects creates appealing investment prospects for those seeking to profit from India’s changing real estate market.
The Union Budget 2024 has sparked a variety of responses within the NRI community. Presented by Finance Minister Nirmala Sitharaman, the budget was eagerly anticipated by Indian expats, who were hoping for targeted reforms and measures addressing their specific needs.
Given that Indian diaspora remittances exceeded INR one lakh crores (US$125 billion) last year—leading the world—expectations were high. Key issues included enhanced social security and the reduction of high airfares.
While the budget included positive measures for employment, consumer spending, and support for rural and MSME sectors. Many NRIs feel that their major concerns remain unaddressed, leading to a sense of disappointment.
The Union Budget 2024 brings forward promising initiatives, including enhanced pension schemes and smart city investments, which signal positive growth and development. However, the introduction of stricter property tax regulations and higher TDS on capital gains adds new complexities for NRIs.
While the budget’s ambitious goals aim to drive progress, they also introduce challenges that may complicate financial planning for the NRI community. Staying informed and adaptable will be key as these changes take effect.
NRIs will need to navigate this evolving financial landscape with care and vigilance. Ensuring they stay ahead of the adjustments to manage their finances effectively and capitalize on new opportunities. You can book last minute flights from Canada to India to manage your finances effectively and capitalize on new opportunities.
Also Read: Indian Compliance Laws: What Every NRI Needs to Know?
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