Union Budget 2025: NRIs Seek Tax Relief, Easier Compliance, and Policy Clarity

30 Jan 2025 , 12:18 PM

As India gears up for Union Budget 2025, NRIs are hoping for policy changes that simplify tax compliance, offer better incentives, and strengthen their role in India’s economy.

Easing Tax Treaty Benefits: NRIs often face delays in tax refunds due to Double Taxation Avoidance Agreements (DTAA) claims at the ITR stage. Clearer TDS deduction rules and Form 16 provisions can help reduce these complexities.

Simplifying Form 10F for Tax Relief: Currently, NRIs need a Tax Residency Certificate (TRC) to claim treaty benefits, but obtaining a TRC for future periods is a challenge. Allowing NRIs to declare intent to furnish the TRC later would ease compliance.

Clarity on Tax Residency Rules: The 60-day rule for Indian citizens visiting India allows them to retain NRI status if income stays below ₹15 lakh, but the term ‘visit’ is not clearly defined. A clear definition would help NRIs determine their tax status.

Deferring ESOP Taxation for NRIs: Currently, only startup employees can defer tax on Employee Stock Option Plans (ESOPs). Expanding this benefit to all employees across sectors would encourage ESOP adoption and ease tax compliance.

Simplifying TDS on Property Sales and Rent: NRIs need a Tax Deduction and Collection Account Number (TAN) and must file e-TDS returns when selling or renting property in India. A simplified TDS payment system like that for residents would ease compliance.

Easier ITR Filing and Verification: While e-verification is mandatory, many NRIs without Aadhaar or Indian bank accounts face challenges. The need to send physical ITR-V forms internationally causes delays. A more accessible e-verification process is needed.

Better Access to Tax Documents: NRIs face IP restrictions when accessing Form 26AS, AIS, and TIS. Ensuring global access to these documents would improve compliance.

ITR-1 for NRIs: The simplified ITR-1 form is currently available for residents. Extending it to NRIs with limited income sources (salary, house rent, etc.) would make tax filing easier.

Tax Refunds to Overseas Accounts: Despite allowing overseas bank details in ITR, refunds are credited only to Indian bank accounts, creating delays. Allowing direct refunds to overseas accounts would benefit NRIs.

Flexible Tax Payment Options: NRIs can only pay taxes via Indian bank accounts, causing cash flow challenges. Allowing global payment options would simplify the process.

Extending the Deadline for Revised Returns: The December 31 deadline for revised/belated returns creates issues for NRIs needing time to claim foreign tax credits. Extending it to March 31 would ease tax compliance.