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Growing trend: NRIs return home to work as economy surges
NRI Remittances to India Surge Following Yuan Devaluation
NRI remittances to India jumped by up to 25 per cent in the past few days as the devaluation of the Chinese yuan weakened the rupee and led to attractive exchange rates, top executives of exchange houses in the UAE have said.
The exchange rate for the rupee hovered between 17-17.35 these past two weeks and on Friday touched 18 against the UAE dirham. It hit 18.10 on Monday – the lowest since 2013.
White-collar workers in the UAE took advantage of the freefall of currencies and remitted more money compared to the past few months, according to a report in the Khaleej Times.
Exchange rates for rupee across the Gulf Cooperation Council (GCC) have also been at their highest in quite some time, with the currency going for 18.70 against the Qatari riyal, 17.29 against the Saudi riyal, 173.05 against the Omani riyal, 217.49 against the Kuwaiti dinar, and 174.06 against the Bahraini dinar, the report said.
Favourable exchange rates helped surge remittances to India between 20 per cent and 25 per cent, it said.
Last year, India received $70.4 billion remittances from its worldwide diaspora.
The NRIs based in the UAE sent home $12.6 billion remittances in 2014, according to the World Bank.
According to industry insiders, blue-collar workers couldn’t take advantage of record low exchange rates as they send money at specific dates every month after getting their salaries.
The current fall in rupee is mostly attributed to the falling oil prices as well as the strengthening of the dollar.
Earlier in the month, China devalued its yuan that stirred equity as well as currency markets globally.
There are about 2.5 million non-resident Indians in the UAE.
Many salaried expats hope for the rate to stay like this for some time, so that they can capitalise on the good exchange rate, since they have already remitted a part of their income at the start of the month and have to wait until the next pay comes to make any transactions, the report said.
NRI panel chief to tour Toronto, New York to hear grievances
After the Shiromani Akali Dal (SAD) office-bearers and Punjab cabinet ministers, now the NRI commission chairman of the state will visit Canada and the US to hear the grievances of the non-resident Indians, Punjabis particularly, in Toronto and New York.
In his campaign to get Punjabi diaspora’s support for the 2017 assembly elections, deputy chief minister Sukhbir Singh Badal is focussing on the North American countries especially, where backing for the rival Aam Admi Party (AAP) has swelled since the parliamentary elections of 2014. NRI commission chairman justice Rakesh Garg (retd), who will be on a five-day visit to Toronto from September 5 and in New York for three days later, told HT much more remained to be done to redress the grievances of the Punjabis settled in the two countries, which will be the objective of his meetings with them. Justice Garg said he was making this tour on the state government directions.
Trying to avoid the backlash that Akali ministers and office-bearers faced on their recent tour, Garg said he would not address public meetings but have planned gathering for people with genuine grievances. “Already, a number of these meetings have been fixed. We have tied up with the Indian consulates in Toronta and New York to facilitate us in this mission. The commission will follow up all the issues that would be brought to his notice.
Garg said the NRI commission could do a better job if it had the power of the adjudication commission that came into existence in 2011. “Punjab probably is only state to have such a commission,” he said, calling upon non-resident Punjabis to lodge their complaints with the commission in case the NRI wing of Punjab Police has not solved their problems. “Non-resident Punjabis tend to approach the NRI sabhas, which though voluntary and non-profitable, are ineffective because of a limited area of operation.
Overseas Akali bodies in Sept
The Shiromani Akali Dal (SAD) is expected to announce the office-bearers of its overseas units by the second week of September after party president Sukhbir Singh Badal returns from his South Korean tour. Last week, the party discussed the names its America-returned delegation had recommended for overseas office-bearers and Sukhbir said they would be assigned specific tasks.
Rupee slide a pain for authorities but brings cheers to NRIs
Sushma Swaraj invites diaspora to invest in India
Noting that India’s economy has rebounded strongly after NDA came to power, External Affairs Minister Sushma Swaraj has invited the diaspora to invest in the country as she listed steps taken by the government to boost trade and make India a global manufacturing hub.
“They will now be able to return home soon,” she said.
Swaraj said the Gulf and the North Africa were crucial for India’s energy security and complimented the diaspora community for their contribution in ensuring stronger ties between countries of the region and India.
Talking about the last general election, she said it has given a “huge mandate” to the leadership of Prime Minister Modi and his government is now working tirelessly to fulfil the aspirations of the people.
Swaraj arrived here yesterday on the first leg of her two-nation tour. From here, she will leave for Germany tomorrow.
Most importantly, India is the sixth largest trading partner of Egypt – the second largest export destination.
India’s imports from Egypt were worth USD 1.74 billion during 2014-15.
Indian businessmen have invested nearly USD 3 billion in about 50 companies in Egypt and have given employment opportunities to around 35,000 Egyptians.
“You represent the entire spectrum of the vibrant diversity of India and come from different parts of India. I am happy that you have kept your traditions alive and celebrate Holi, Diwali, Dushera and Eid with an equal fervor. Your achievement makes all of us proud,” Swaraj said.
NRIs in Gulf keen on NPS old age pension scheme
The NRI community in Gulf countries has been waiting to know the prospects of newly announced National Pension System (NPS) of India for NRIs.
The government of India established a Pension Fund Regulatory and Development Authority (PFRDA) in 2003 to develop and regulate the pension sector in the country. The National Pension System (NPS) was launched on January 1, 2004, with the objective of providing retirement income to all Indians including NRIs.
NRIs aged between 18-60 years are eligible for pension depending on the investment made. According to the PFRDA, subscribers can choose their investment mix that is generally in equity, corporate bonds or government securities, as per his/her risk appetite. The benefit subscribers ultimately receive depends on the amount of contribution, the returns made on the contributions and the period of contributions with a minimum annual contribution of Rs 6000.
This is especially of importance to NRIs living in the Gulf countries, since they don’t have mandatory social security benefits in their countries of residence, unlike in most Western countries.
The PFRDA intends to popularize its National Pensions System (NPS) product in large scale among the NRI community, especially the blue-collared workers in the Gulf region in general and Saudi Arabia – the largest country with over 30 lakh NRIs resides – in particular.
PFRDA is seeking the support of Indian missions and community organisations in the region to make the scheme success.
Speaking with this journalist on the phone, PFRDA’s deputy general manager Akhilesh Kumar said NPS is a defined contribution-based pension system in which a subscriber contributes money during his/her working or productive age to provide for his/her old age income security. He said that funds are invested by professional Pension Fund Managers in line with the investments guidelines issued by government.
The official added that NPS architecture is transparent and is web-enabled. It allows a subscriber to monitor his/her investments and returns under NPS, the choice of Pension Fund Manager and the investment option. He further explained that it allows the subscriber to switch the investment options.
He advised NRIs to approach their banks in India for subscription details and fulfilling KYC norms to subscribe into NPS.
Kumar also advised NRIs to visit www.pfrda.org.in or www.nptrust.org.in for details.
Memon A. Khader, community worker in Jeddah who has worked earlier for NRIs’ pension support schemes said: “The NRI community in the Gulf region lacks financial planning for old age and faces hurdles upon returning home.”
He said that new pension scheme will be great assurance for the retired lives of NRIs when they return home for good and he urged all concerned to make the scheme a success.
An overwhelming majority of NRIs aged above 40 years live in the Gulf countries and if they plan properly and invest in pension schemes with around SR 399 for some years, it would guarantee good returns when they reach the age of 60 years, according to him.
Suresh Bharti, a community worker in Dammam welcomed the NPS and said the NRI community in Saudi Arabia would extend every possible cooperation for it success. He also urged authorities to draw special focus upon blue collar workers of the Gulf region with their low income sources in NPS to attract their investment.
Earlier, the government of India had floated the Mahatma Gandhi Pravasi Suraksha Yojana (MGPSY) for overseas Indian workers who had Emigration Check Required (ECR) passports (mostly blue-collar workers). However, that scheme failed to draw any attention from NRIs.
NRI Alert: 7 days left to file your Indian tax returns
As a Non-Resident Indian (NRI), you don’t have to pay taxes in India, right? Think again.
For resident Indians, while there are a handful of permutations and combinations to arrive at whether or not you must file tax returns, as an NRI, it is simple to know if you must.
For resident Indians, all income earned above the exempted limit of Rs250,000 – anywhere in the world – is taxable. However, there are exemptions based on age, etc.
Contrary to popular belief that Indian expats don’t have to file tax returns in India, if an NRI’s income in the home country is more than Dh1,150 per month (Rs20,833), s/he need to file tax returns.
Which means that if you have a property in India from which you are receiving a monthly rent of, say, Rs15,000, and have fixed deposits in Indian banks that return Rs5,000 per month, and earn dividends from shares of Rs834 or more, then you are entitled to file tax returns as your total annual income in India becomes more than Rs250,000.
Remember, however, that interest on NRE and FCNR account is tax-free while interest on NRO account is fully taxable.
Also remember that filing tax returns if you fall in that bracket, isn’t a choice – it’s mandatory.
So if you’ve calculated that you need to file tax returns, you must note that, unlike every year when the last day to file tax returns is July 31, this year the deadline for filing tax returns has been extended by a month, to August 31, 2015.
Which means that, as of today (Tuesday), you have seven days to file your tax returns.
Filing the tax returns is a chore, but it will be good for you financially.
For, as NRIs, your income is taxed at the highest rate of 30 per cent, and you stand to gain some of that back by claiming a refund by filing the returns.
It is also beneficial for those who wish to carry forward losses or offset gains.
Remember that you need not be in India to file tax returns – you may file your tax returns online on the Income Tax Department e-filing portal, post your documents to the IT department, or file through one of the numerous tax agents (who will charge you a fee for their services).
Tips for NRIs to file tax returns:
• When to file: The extended deadline for filing tax returns this year is August 31, 2015.
• Exemptions: NRIs can claim the same exemptions available to resident Indians Income Tax Act (barring those specifically not applicable to NRIs), such as Section 80C, with respect to investments, principal on mortgage, etc.
• TDS: If your total Indian income during the financial year is derived from investment income and/or long-term capital gains, and the tax has been deducted at source from such income, then it is not mandatory for you to file returns.
NRIs propel deposits growth in Q1 of FY16
Non-Resident Indians (NRIs) seem to be making most of the rupee depreciation against US dollar. This is evident from the fact that NRIs deposits accounted for more than 50% of the new deposits received by various banks in Gujarat during the first quarter of fiscal 2015-16.
The state saw the overall deposits grew by Rs 8,294 crore in April-June quarter, of which Rs 4,465 crore came from NRIs. Interestingly, the total deposits in the state increased by just 1.69% during the period while NRI deposits recorded a rise of 8.18%.
“Rupee has reached almost to 66 against US dollar. With such fall in rupee, overseas Indians are sending money in large numbers in the country,” said Aspy Bharucha, forex consultant.
Consistent fall in rupee and higher returns on deposits in India have propelled NRI deposits in state beyond Rs 59,000 crore in the first quarter of 2015-16. On Saturday, rupee closed at Rs. 66.19 against a dollar.
According to the latest data by State Level Bankers’ Committee (SLBC), NRI deposits in Gujarat stood at Rs 59,039 crore – forming about 11.84% of the total deposits as of June 30, 2015 as against Rs 54,574 crore (11.13%) as of March 31, 2015.
Almost all the districts recorded increase in NRI deposits. Ahmedabad district recorded the maximum increase in NRI deposits with over Rs 900 crore added in the first quarter of 2015-16 followed by Kutch with Rs 700 crore.
Attractive interest rates offered by banks to NRIs along with improvement in sentiments in last one year are few reasons for constant increase in NRI deposits, claim experts.
Experts opine that the NRIs are depositing their money in rupee currency as to get higher returns. “Banks are offering interest rates of more than 8% to NRI account holders, so they are depositing in rupee terms to get maximum benefit,” added Bharucha.
With rupee unlikely to recover in near future, the deposits are likely to go up further by September end. Also the interest rate factor is ensuring good flow of NRI money.
“Liquidity crisis in some parts of the world also prompted NRIs to divert their funds to India,” said Jayesh Vithalani, financial consultant.
When should an NRI file tax return in India?
You’ve packed your bags and left India to settle abroad. But, you earn an income from the assets you still own back home or have deposits lying in bank accounts. If you are an NRI, you may be unsure about filing a tax return in India. As a thumb rule, if your gross total income is more than Rs 2,50,000, before allowing any deductions(under section 80), you must file an income tax return in India. While resident senior citizens and super senior citizens enjoy higher exemption limits, maximum exemption limit of Rs 2,50,000 is fixed for an NRI irrespective of his or her age.
For estimating this gross total income, a resident has to include all the incomes earned by her anywhere in the world, while a non-resident’s gross total income for paying taxes in India only comprises income which is earned by them in India. So what are the incomes a non-resident is taxable for in India?
Income from salary will be considered to arise in India if your services are rendered in India. So even though you may be an NRI, but if your salary is paid towards services provided by you in India, it shall be taxed in India. If the NRI owns a house property situated in India such income is taxable in India. Capital gains from sale of property in India shall be taxable in India. Similarly income earned from deposits held in India must be included in your income. If the sum total of these incomes exceeds Rs 2,50,000 the NRI must file a tax return in India.
Another scenario where an NRI must file a return is when the NRI is seeking a refund. This can happen when Tax Deductible at Source (TDS) has been deducted on the NRIs income but her gross total income is below the Rs 2,50,000 threshold. A refund can only be sought by e-filing your tax return.
Where an NRI has losses to carry forward a return must be filed by her.
Let’s look a few scenarios where an NRIs income would be considered as ‘earned’ in India and included in the tax return in India.
* You have accounts or deposits in India. Any returns in the form of interest in these accounts is income earned in India.
* You moved abroad during the financial year 2014-15 and you are an NRI for purposes of income tax for financial year 2014-15. Prior to your move, you spent a few months in India and earned salary in India, your employer has provided you a Form 16 and all taxes are duly deducted by your employer. If your gross income from this employer and including all your other incomes in India for the entire financial year exceed Rs 2,50,000, you must file a return in India. If your gross income does not exceed Rs 2,50,000, you should still file a return to claim refund of TDS deducted.
* You have a house property in India which you rented out for an annual rent of Rs 3,00,000. That is your only income from India. As per rules of taxation for house property, you can deduct 30% of the rent allowed as standard deduction and also property taxes paid by you, if the resulting amount is less than Rs 2,50,000, you may not have to file a return in India. Usually, tenants deduct TDS on rent before making a payment to NRIs, and therefore if TDS was deducted on your rental income, you can file a return to seek refund.
* You own two or more than two house properties in India, though none of these is let out. There is no rental income. In such a case as per the income tax act only one house property shall be considered to be self-occupied and its income shall be considered nil and all others will be considered deemed to be let out properties and therefore you will have income from house property and you will be required to file a return in India, if your income exceeds Rs 2,50,000. You have deposits in India and bank deducted TDS from your deposits. While your total Income in• India is less than Rs 2,50,000, file a return in India to claim refund for the excess tax deducted. Do note that NRIs cannot submit Form 15G and Form 15H to prevent deduction of TDS.
* You have been settled abroad and you decide to sell your only house property in India which was given to you by your parents, any capital gain on this house property is liable to be taxed and therefore a return must be filed by you.
* You decide to buy a car for your parents who reside in India, no return of income is required to be filed by you, and there is no tax liability for you upon gifts to your parents.
The due date to file income tax return for NRIs and Residents individuals is August 31, 2015 for income earned in the financial year 2014-15. If there is tax payable in your return, you may have to pay penal interest, so do calculate your taxes and file your returns timely.
NRIs Renting Property in India – Types of rental agreements in India
Many NRI’s and PIO’s purchase properties in India as an investment and perhaps with the goal of probably returning to India at some point of time. Instead of keeping properties vacant, renting out is an option that some people consider.
Rents in the major cities have gone up in the last few years and it does make good economic sense to rent out vacant properties. However, many people shy away from renting as they have are worried about tenants may not vacate the premises.
While there are no full proof methods of protecting landlords in India from tenants who refuse to vacate their property after their rental agreements have expired, there are some steps landlords can take to protect themselves and their property.
Landlords, can protect themselves from undesirable tenants, to some extent by using a leave and license agreement when renting out their property.
There are normally two types of agreements that are used when renting property.
• Rental Lease Agreement
• Leave and license agreement
While both these types of agreements appear to be similar with the purpose of renting property, there is a considerable difference when legal aspects are taken into consideration.
In simple terms, in rental lease agreements, there is, considered to be a transfer of interest from a lessor to a lessee. On the other hand a Leave and License agreement does not create any interest in the premises in favor of the licensee.
Leave and license agreements offer a higher form of protection for landlords against tenants. In general, rent control laws do not apply to leave and license agreements. Eviction, under leave and license is governed by the Easements Act.
NRI’s and PIO’s who wish to rent out their properties should consider using a Leave and License agreement.
Benefits of Leave & License agreements
Tips when giving property on Leave and License
1. Don’t let out your property to anyone unless you check the person who is renting the property. While it is not possible in India to get background check done easily, you could take some precautions, such as checking the person’s employment record, previous address etc.
2. Don’t hand over your property in trust and good faith to anyone regardless of how well they impress you, without checking proper documentation and finding out who exactly is going to occupy your property. When renting to a foreigner, local police should be informed. This is now required by law in many cities.
3. Use a professional to draft the agreement. A lawyer is preferable than a real estate brokers who have a pre written template for an agreement and just fill in the blanks.
4. Pay the required stamp duty for your agreement and register it legally. Unless the agreement is registered, you have no protection.
5. If property is located in a society, then take a No Objection Certificate (NOC) from the society so as to avoid problems in future.
6. It may be advisable to enter into an agreement of only eleven months, and renew if you find things are working out well for you.
7. In cases where a rental agent, such as a broker brings the client, you may consider adding in the agreement that no further brokerage will be paid, if and when the license agreement is renewed. Brokers in India normally charge one month rent as their fee.
Difference between Agreement and Leave and License