As the government unveils the Union Budget, addressing concerns of NRIs could strengthen their role in India’s growth story while ensuring a seamless tax ecosystem.
With the Union Budget for 2025-26 nearing, NRIs are keenly observing the potential reforms and incentives that could bolster their contributions while simplifying compliance. Experts from Ernst & Young India have outlined key expectations that could significantly impact the NRI community.
Treaty relief at source
Claiming tax relief under Double Taxation Avoidance Agreements currently involves tedious refund processes. Introducing provisions for treaty relief at the tax withholding stage, including necessary amendments to Form 16, could simplify this process, reduce administrative burdens, and ensure timely compliance. India’s tax laws currently allow employees of eligible startups to defer taxes on ESOPs. Extending this benefit to all employees, including NRIs, regardless of the employer’s status, could enhance compensation structures and ease cash flow management for NRIs.
Simplifying property and rent TDS
Tax Deducted at Source (TDS) procedures for property sales and rent payments can be complex for NRIs. Streamlined processes and enhanced digital infrastructure would make compliance more accessible and user-friendly.
E-verification challenges
NRIs often face hurdles in e-verifying tax returns due to the lack of Aadhaar or Indian bank accounts. Streamlining e-verification and ensuring seamless access to tax forms from overseas IP addresses could alleviate these challenges, making tax filing more efficient.
Simplified ITR-1 to NRIs
Given that many NRIs have limited income sources, expanding the eligibility of the simplified ITR-1 form to include them would significantly ease compliance.
Tax refunds and payments via overseas accounts
Delays in crediting refunds to overseas bank accounts and restrictions on tax payments through Indian accounts pose challenges for NRIs. Enabling smooth financial transactions through overseas accounts could resolve cash flow issues.
Deadlines for belated returns
Extending the deadline for filing belated or revised returns to March 31 of the assessment year would give NRIs more time to claim foreign tax credits, ensuring accurate and fair compliance. These proposed reforms promise to simplify tax compliance, enhance financial flexibility, and foster deeper engagement from the NRI community. (Courtesy: indiatoday.in)
