Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua. Ut enim ad minim veniam, quis nostrud exercitation ullamco laboris nisi ut aliquip ex ea commodo consequat. Duis aute irure dolor in reprehenderit in voluptate velit esse cillum dolore eu fugiat nulla pariatur.
In the Union Budget presented on February 1, 2025, Finance Minister Nirmala Sitharaman introduced significant reforms aimed at bolstering the Indian economy and providing relief to taxpayers. For the NRI community, this budget brings several significant changes that warrant attention, especially given that India remains the highest recipient of global remittances.
Key Tax Structure Changes in Budget 2025
The new budget proposes a substantial increase in the no-tax threshold, raising it to ₹12 lakh per annum. Under this revised structure, individuals earning up to ₹12 lakh annually will not be liable to pay any income tax. This restructuring aims to enhance disposable incomes and stimulate consumer spending across different income brackets.
Noteworthy Changes for NRIs in Budget 2025
The numbers show the growing confidence of NRIs in India's economic prospects. Between April and August of the previous year, inflows into NRI deposit schemes reached $7.8 billion, more than doubling from $3.7 billion during the same period the year before. This substantial increase signals NRIs' robust faith in India's economic trajectory. A number of initiatives and changes have been outlined in the budget to further the growth of investments from NRIs in India. Let’s dive in!
Liberalized Remittance Scheme (LRS) Updates for NRIs
The budget welcomes changes to the Liberalized Remittance Scheme (LRS), including increasing the Tax Collected at Source (TCS) threshold from ₹7 lakh to ₹10 lakh. The TCS exemption on education-related remittances funded by loans also provides significant relief provides substantial relief.
It's important to note that:
This applies only to outward remittances from India to other countries
The situation remains unchanged for NRIs sending money to India as inward remittances remain exempt from TCS
NRIs should be mindful of foreign income taxation and repatriation rules in their country of residence
Electronics Manufacturing Sector Benefits for NRIs
The budget extends the presumptive taxation scheme to non-residents to boost India's electronics manufacturing sector. This extension mainly benefits NRIs who set up or provide services to electronics manufacturing units in India.
This simplification of tax rules aims to reduce compliance complexities and encourage NRI participation in India's growing electronics sector.
LTCG Tax Reforms for FIIs
Another significant development in the Union Budget is the alignment of long-term capital gains (LTCG) tax rates for non-residents, including Foreign Institutional Investors (FIIs),with those applicable to resident taxpayers.
This change:
Creates a level playing field for residents and non-residents
Simplifies compliance procedures
Applies to the transfer of securities and other capital assets
Aims to boost NRI confidence in Indian market investments
In Conclusion
The Union Budget 2025 presents both opportunities and challenges for the NRI community. While it simplifies specific processes and creates tax parity in areas like LTCG, it also suggests introducing stricter compliance requirements. NRIs should carefully evaluate these changes and seek professional advice to optimize their financial planning and ensure compliance with the new regulations.
Rupali enjoys writing about everything related to money (in India and around the world). A MICA graduate in Communications, she has over seven years of experience in content creation and communication strategy for various user touchpoints, from CRM to UX for apps and websites, especially in fintech and healthcare. Outside of work, you'll find her binging on true crime documentaries or cooking up a storm.
