|
Non-residents Indians (NRIs) will
have to spend a little more on their visits to India after the
latest budget. As the air travel tax has gone up, NRIs now pay
more when they buy their air tickets to travel back home and
within India. Their stay at luxury hotels, guest houses and meals
at good restaurants will cost slightly more as service and other
taxes have gone up.
For medical treatment in India, NRIs will have to pay more because
the service tax on healthcare is up. For example, if an NRI
undergoes heart surgery, the charges go up between Rs.5,000 and
Rs.10,000.
Increasing the income tax threshold marginally from Rs.160,000 to
Rs.180,000 will benefit NRIs paying tax. Senior NRI taxpayers over
60 and very senior taxpayers over 80 will benefit more. But not in
real terms. The inflation rate is higher than the relief. Most
western governments have started announcing tax rates at least
three years in advance so that people can plan ahead and India
needs to follow this system, urges S.K. Gupta, an NRI chartered
accountant.
Despite the recent negative news of scams and corruption, NRIs are
still interested in buying property, investing in stocks or mutual
funds, starting new ventures and even settling in India to retire.
Should they take this plunge after this budget? Yes, considering
the returns they can reap from their investments.
Suppose an NRI invests Rs.100,000 ($2,216 or 1,603 euros at
current rates) in the three options of fixed deposits, equities
and mutual funds (MFs). If an NRI puts down a fixed deposit of
Rs.100,000 ,the total amount with interest will rise to Rs.113,000
for one year and Rs.174,000 after five years. If an NRI invests
Rs.100,000 in equity, after one year the investment will more than
double to Rs.226,000 and in five years, it will rise further to
Rs.278,000. Now, if an NRI invests Rs.100,000 in MFs, it will go
up to Rs.176,000 after one year more than triple to Rs.358,000
after five years with less risk than equities.
The highest returns come from MFs when compared to investing in
fixed deposits or in Indian stocks. The initial paperwork for
getting a Permanent Account Number (PAN) Card and getting KYC
(Know Your Customer) takes a lot of time and effort and the budget
has not addressed this problem, but the high returns make it
worthwhile.
In a bold budgetary move, the Indian capital markets have been
thrown open to foreign investors. This means that an individual
foreigner can now invest in equity MFs. The NRIs still have an
edge in the lower risk debt funds segment as foreigners cannot
invest in the area, said Sanjay Durgan of Abundanze Wealth
Management.
By holding the Pravasi Bharatiya Divas conferences in India and
abroad with other initiatives, the Indian government has roped in
rich NRIs to invest in India. NRIs who are also High Net
Individuals (HNIs) continue to park their savings and investments
in India because they see long-term stability and economic
progress of this country. Middle class NRIs want security and
steady returns on their savings and so they are also banking on
India, said Vikas Vij, a practising accountant.
Ever keen to buy property in India, NRIs are daunted by the sky
high real estate prices. But they fear the largely unregulated
Indian real estate market. No steps have been taken to license and
weed out unscrupulous real estate agents and property developers.
Legislation on this problem is in the offing but too many NRIs
have been duped. The stamp duty and the procedure for property
registration are not uniform all over the country and this poses
many problems for NRIs who want to buy property during their short
visits. An Indian Stamp Act will be tabled to address this
problem. Non-operational limited liability companies in India with
NRI partners could not be easily wound up. Now the budget offers
an Easy Exit Scheme to wind up these companies.
The total NRI remittances for 2010 were $55 billion. These were
expected to rise further last year. This year, NRI remittances
from the Middle East, especially Libya, will decline but the total
amount is expected to remain at this level and may increase
marginally.
Despite the slowdown following the 2008 financial crisis in the
West and the current unrest in North Africa and the Middle East,
NRIs still continue to look at India for depositing their savings
and making investments, although they did not get any special
incentive in this budget. Still, NRIs will send and keep their
money in India where their heart is.
(Kul Bhushan worked
abroad as a newspaper editor and a media consultant to a UN
agency. He lives in New Delhi and can be contacted at: kb@kulbhushan.net)
|
Comments
|
Quick links