Simplification of income tax processes and relief on tax deducted at source (TDS) are among the top of the Budget wishlist of non-resident Indians (NRIs), say experts. Finance Minister Arun Jaitley will present the budget on February 29. Experts believe that one of the long-pending demands of NRIs is tax treatment at par with the resident Indians in case of TDS exemptions. According to the current income tax law, a resident Indian is required to pay TDS on income only if the amount of income earned is beyond a certain limit in a financial year. For example, a resident Indian is liable to pay TDS on rental income only if the total amount of rental income exceeds Rs. 1.8 lakh per year. Similarly, in case of a professional, if the income exceeds the limit of Rs. 30,000 per year then only the person is liable to pay TDS on professional income. No such exemption from TDS is available to the NRIs. In case of NRI, TDS is deducted as per the applicable slab rate of NRI based upon his or her income in India. “The Budget may introduce a certain exemption for NRIs as well. This will on the other hand, encourage more investment in India by NRIs,” says Amit Maheshwari, managing partner, Ashok Maheshwary & Associates, a chartered accountancy firm. To avail lower tax rates under tax treaties that India have with the country of residence of NRI, he or she is required to bring tax residency certificate (TRC) from the tax authorities of the country in which he or she is a resident. “It is a very tedious and difficult task. It is expected that NRI should be provided some relaxation in getting TRC,” says Mr Maheshwari. “The government should consider alleviating this difficulty for non-residents. A lower rate of TDS should be prescribed for non-resident individuals. They should also be exempted from the requirement to produce TRC to claim the lower rate of tax under the treaty,” says Tapati Ghosh, partner at Deloitte Haskins & Sells. Experts also feel that NRIs should be exempted from filing tax returns on which TDS has been already been deducted. “Abolish the requirement to file return of income if tax on income of NRI already discharged by way of TDS. Currently, this relaxation applies only if income is relating to assets purchased from convertible foreign exchange,” says Parizad Sirwalla National Head-Global Mobility Services-Tax, KPMG. NRIs also face difficulty in claiming the tax refunds as they may not have operative bank account in India and this issue needs to be addressed, say experts. “There are no provisions in the tax laws which provide for direct remittance of refund amount to the foreign bank account of the NRI,” says Parizad of KPMG.
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