A majority of non-resident Indians (NRIs) want reduction or removal of excessive tax deduction at source (TDS) across asset classes this Union Budget.
A huge 92 per cent of those surveyed by Mudra Portfolio, a Mumbai-based global NRI and high networth individual (HNI) financial service management company, have said that they would prefer this over reduction in the tax rates. The reason they cited was that their tax liability was way less than the TDS, and so, removal of excessive TDS would ensure that they won’t have to wait till filing their returns to claim the excess tax deducted.
At present, the TDS rate (excluding surcharges) for interest on non-resident ordinary (NRO) accounts and deposits is 30 per cent, while that on long-term capital gains (LTCGs) and short-term capital gains (STCGs) on equities are 10 per cent and 15 per cent, respectively.
The TDS rate on STCGs from debt (non-equity) mutual funds is 30 per cent and the same on property sale (on the sale value), and rental income are 20 per cent and 30 per cent, respectively. The rate for dividend income is 20 per cent.
According to the survey, TDS is considered a big dampener for NRIs while selling property. About 92 per cent of respondents stated that the 20-23 per cent TDS on property sales, and that too, based on sale value rather than capital gain, should be decreased. Obtaining the low TDS certificate from the income tax department takes a bit of time and effort, and purchasers rarely wait that long, the survey revealed.
Nishant Kohli, founder director and business head-wealth, Mudra Portfolio, said they reached out to NRIs across 15 nations for the survey.
“Every year, the finance ministry works on the Union Budget and solicits views and comments from businesses and taxpayers. This time, we decided to reach out to the NRI population in about 15 nations. Normally, a survey consists of a series of questions, but this often excludes the originality/suggestion component. So, we approached NRIs with only one question and asked them to indicate what they would want to see included in the Budget, which would give room for them to express the problems they were experiencing and the solutions they desired. And the responses we received were quite overwhelming,” Kohli added.
Investment Heads
According to the survey, 88 per cent of respondents said they had invested in real estate, 72 per cent in mutual funds, 15 per cent in direct stocks, and 100 per cent in NRE/NRO fixed deposits. A 15 per cent said they had invested in foreign currency non-resident (FCNR) accounts and another 6 per cent in other products such as private equity, portfolio management service and venture capital among others.
A huge 90 per cent of those surveyed further said that they would prefer the income tax department to send them notifications to their overseas contact number instead of their Indian contact number for ease of access.
A recent report by the Ministry of External Affairs shows that there are 32 million NRIs and Overseas Citizens of India across the world. Overseas Indians are the world’s largest diaspora.
From several decades, remittances and investments from overseas Indians have been one of the key sources of development for the Indian economy.
The NRIs, the survey revealed are in favour of government’s efforts towards making investment and taxation simpler, fairer and easier to comply with.
