The Union Budget 2025, presented by Finance Minister Nirmala Sitharaman, introduces significant policy changes affecting Non-Resident Indians (NRIs). Covering taxation, investment regulations, real estate transactions, and compliance measures, the new budget outlines critical reforms that influence financial planning for NRIs. This article explores the major highlights of the Union Budget 2025 and its implications for the global Indian community.

1. Revised Tax Residency Rules for NRIs

Budget 2025 has tightened tax residency norms to prevent tax avoidance and enhance compliance:

• New Residency Criteria: NRIs staying in India for more than 120 days in a financial year, with Indian income exceeding ₹15 lakh, may now be considered residents for tax purposes.

• Pre-Filled ITR Forms: The government has introduced pre-filled Income Tax Return (ITR) forms to simplify tax filing for NRIs.

• Stricter TDS Compliance: NRIs earning rental income, capital gains, or dividends from Indian assets will face increased scrutiny under automated tax compliance systems.

2. Changes in Tax Collected at Source (TCS) on Remittances

The union budget 2025 for NRI has revised remittance policies under the Liberalized Remittance Scheme (LRS) to ease financial transfers:

• Higher TCS Exemption Limit: The TCS-free remittance threshold has been raised from ₹7 lakh to ₹10 lakh per financial year.

• Lower TCS on Education and Medical Expenses: TCS rates have been reduced for funds remitted abroad for education and medical treatments, benefiting NRIs and their families.

3. NRI Investment Incentives and Market Reforms

To attract NRI investments, the government has announced several key initiatives:

• Uniform Long-Term Capital Gains (LTCG) Tax Rates: NRIs will now pay the same LTCG tax rates as resident investors, fostering equal investment opportunities.

• Extended Startup Tax Benefits: NRIs investing in Indian startups will benefit from tax exemptions extended until April 1, 2030.

• Relaxed Foreign Direct Investment (FDI) Regulations: New policies encourage NRI investments in renewable energy, technology, and infrastructure sectors.

4. Real Estate and Property Sale Taxation for NRIs

The Union Budget 2025 brings much-needed reforms to NRI property transactions:

• Faster TDS Refunds: NRIs selling property in India will now experience expedited TDS refund processing, eliminating long waiting periods.

• Standardized TDS Rates: Property transactions above ₹50 lakh will have a flat TDS rate of 20%, ensuring consistency in tax deductions.

• Online TDS Certificate Application: The introduction of a digital application process for lower TDS certificates simplifies tax deduction procedures for NRIs.

5. Digital Banking and Financial Access for NRIs

To improve banking accessibility, the government has introduced several digital reforms:

• Fully Digital KYC Process: NRIs can now complete KYC verification online, making it easier to open and maintain NRE and NRO accounts.

• PAN-Aadhaar Integration: This initiative will streamline financial transactions and tax compliance for NRIs.

• Efficient Fund Repatriation Mechanism: Enhanced digital infrastructure will enable faster and more transparent repatriation of funds from India.

6. Strengthening DTAA Benefits and Global Tax Compliance

With increasing international financial scrutiny, Budget 2025 emphasizes compliance with Double Taxation Avoidance Agreements (DTAA):

• Better Foreign Income Reporting: NRIs must now ensure transparent reporting of foreign income and global assets to claim DTAA benefits.

• Lower Tax on Retirement Fund Transfers: Reduced tax rates have been introduced for NRIs transferring 401(k) and UK pension funds to India.

• Enhanced Global Tax Data Exchange: India has expanded its network of automatic tax information exchanges with other countries to improve compliance.

7. Social Security and Retirement Benefits for NRIs

The government has introduced new measures to protect NRI retirement funds and social security contributions:

• Recognition of International Social Security Contributions: NRIs working in countries with mandatory social security schemes can now avoid double taxation on contributions.

• Retirement Fund Transfers: Special provisions allow NRIs to bring back retirement savings to India at lower tax rates.

Conclusion

The Union Budget 2025 presents a mix of opportunities and challenges for NRIs. While tax residency rules have become more stringent, beneficial reforms such as higher TCS exemption limits, streamlined investment taxation, digital banking enhancements, and improved real estate transactions make financial management more convenient for NRIs.

To navigate these changes effectively, NRIs should consult financial experts and tax professionals. Dinesh Aarjav & Associates offers expert tax and financial advisory services, ensuring NRIs make the most of the evolving regulatory landscape.