What benefits budget 2019 has for NRIs

NRI Budget 2019

NRIs have a reason to feel happy and relieved with the new Finance Minister Nirmala Sitharaman’s Budget for the year 2019.

For a start, their welcome into the country just became warmer! The Union Budget of 2019 has proposed to consider issuing the Aadhaar Cards to NRIs (who have Indian Passports) post their arrival in the country.

  • Fast process for Aadhaar Card
  • Easy NRI investments
  • More Indian Embassies and High Commissions
  • Global Investors Meet in India

Till this budget, NRIs had to wait for a period of 180 days. Earlier under the Aadhaar (Targeted Delivery of Financial and Other Subsidies, Benefits and Services) Act, 2016, NRIs who have resided in India for a period of 182 days or more in 12 months and with an Indian address could apply for Aadhaar.  The issue of Aadhar card to NRIs on arrival to India will help NRIs to a great extent as aadhar card acts as both identity card as well as proof of address as it consists of both demographic and biometric data.

The Finance Minister declared “I propose to consider issuing Aadhaar card for non-resident Indians (NRIs) with Indian passports after their arrival in India without waiting for the mandatory 180 days.”

NRIs interested in investing in India can also heave a sigh of relief now – our Finance Minister paved the way for them to have easier access to Indian equities. The NRI-Portfolio Investment Scheme Route has now been merged with the Foreign Portfolio Investment Route. 

In addition, with NIIF as an anchor, there will be annual Global Investors’ meet organised in India. This is being done to encourage major global investors to come and invest in India. Moreover, there are steps to open Foreign Direct Investment in aviation, media, animation AVGC and also to open up FDI up to a 100% level for insurance intermediaries. This will bring in a single regime for foreign investors. It also seeks to regulate investments and funds brought in by the non-resident Indians and person of Indian Origin.

The move on the FPI aspect has come about as part of the recommendation of the H R Khan Committee. The economy can be assured of larger pools of NRI capital through pooled and professionally managed structures. Foreign Portfolio Investment refers to the grouping of assets including bonds, equities and cash equivalents. These portfolio investments are held directly by an investor or managed by financial professionals.

In the past the cap on NRI participation through the FPI route had received serious push back from global fund managers. As reported in the media, the Securities and Exchange Board of India said if single and aggregate NRI/OCI holdings in assets under management of FPIs are below 25% and 50%, respectively, then such persons will be allowed to be constituents of the FPI. In case of breach, the FPI will need to comply within 90 days and in case it remains non-compliant even after 90 days, no fresh purchases will be permitted and such FPIs will have to liquidate their existing position in the Indian securities market within 180 days.

This move on FPI will bring in additional benefit since earlier in the year, SEBI came out with the rules for the merger and also exempted both housing finance and non-banking financial companies. From now, none of them will have to disclose the rise and fall in the shareholding due to encumbrance or release of encumbered shares. Currently, only the scheduled commercial banks and public financial institutions are exempted from disclosures.

Demonetisation effects on GST

demonetisation effects on GST

GST Caught Between Political Tussles – Fallout of Demonetisation and the wave thereafter!

Would Prime Minister Modi have thought that his ‘surgical strike’ on black money have an impact on the other proposed wonder drug of the economy – the GST? Well it looks like it is creating an impact on those lines. The tsunami that the demonetisation process has brought has led to feuds between the government and the opposition, besides generating a mixture of responses from the public and media. This animosity on the political front has caused the GST drive to suffer a setback.

And while on Taxes, the country’s finance minister has hinted now that the tax rates might be lowered –the assumption being that demonetisation would bring in higher tax revenues from unaccounted wealth. Considering the fact that digitisation would push a greater number of people to be in the tax net, it is hoped that in the future the taxation levels would end up being much higher. Consequently, tax rates could be made more reasonable for both direct as well as indirect taxes.

For now, people are hoping that the government might bring in a number of concessions for the taxpayer – be it individuals or the corporate sector. This would ease out the pain felt during demonetisation. The steps could vary from tax slab revision to reduction in corporate taxes to tax exemptions and rebates. All this is expected to target farmers, small traders, small and medium businesses and the youth. Over the past one month or so, the government has in any case been giving incentives to encourage digital payments. The currency situation is expected to improve by the third week of December.

Meanwhile, more than a month after demonetisation, these are some of the noticeable trends in the Indian economy:

  • Projected GDP growth for this fiscal year is 7% – this is as per the estimate given by the Asian Development Bank.
  • The figure for the next fiscal year is about 7.8% – as per ADB, the impact of demonetisation is temporary
  • Some of the incentives for cashless transactions were :
  1. 5% discount by Railways for online payment on facilities like e catering and booking retiring rooms
  2. 5 % discount by the Railways on season tickets that are purchased digitally January 1, 2017 onwards
  3. The banks had released about Rs. 4 trillion back into the system till the first week of December
  4. Banks had got about Rs. 12.4 trillion in deposits till mid December , since Demonetisation
  5. Amongst other aspects, the IMF survey on Financial Access pointed out that the number of ATMs per 100,000 adults is 19.71.
  • As of midnight December 15, the usage of the old 500 notes would stop completely – beyond this, the notes would only be deposited in the banks till December 30 and be exchanged at the RBI till March 31, 2017 (under special circumstances).
  • Till midnight December 15, the old 500 notes can be used in the following places:
  1. Government hospitals and pharmacies
  2. Consumer Cooperative stores
  3. Government Agricultural Research centres and related organisations
  4. Government milk booths
  5. Payments at all pharmacies
  6. Purchase of LPG cylinders
  7. Toll payments
  8. Fees, charges taxes, penalties towards government organisations
  9. Utility charges like electricity and water
  10. Court fees, Government school fees
  • The RBI updates its notifications and frequently asked question list (FAQs) for people to understand the basics of note deposit and exchange – it lays down certain specifications for NRIs also.
  • Although we try to bring you all the latest information, there are frequent changes and declarations made by the government. We would advice all our readers to keep checking the RBI official site (www.rbi.org.in) for authentication of all facts.