Potential Amendments Benefiting NRI Taxpayers
Potential Amendments Benefiting NRI Taxpayers
Potential Amendments Benefiting NRI Taxpayers
Several areas could be reformed to provide greater convenience and efficiency for Non-Resident Indian (NRI) taxpayers. Below are some key expectations:
- TDS on Purchase of Immovable Properties:
When purchasing immovable property (except agricultural land) from Indian residents, buyers must deduct 1% TDS on the property value and complete the process through Form 26QB. This process is relatively straightforward. However, when the seller is a non-resident, the applicable TDS rate is significantly higher, and buyers must also obtain a TAN (Tax Deduction and Collection Account Number) and file e-TDS returns, adding to the complexity. This creates administrative difficulties for both buyers and sellers. Introducing a simpler process for non-resident sellers, similar to that available for resident sellers, could ease compliance and ensure smoother transactions. - E-filing of Tax Returns:
The introduction of electronic filing has enhanced the tax return submission process. However, the final step—e-verification—continues to be a hurdle for NRIs. Currently, verification requires either an Aadhaar-based OTP linked to an Indian mobile number or a digital signature certificate (DSC). In cases where these options are unavailable, NRIs must physically submit the ITR-V. Allowing verification through email, overseas mobile numbers, or foreign bank accounts could streamline the process. Additionally, extending the 30-day verification deadline for non-residents would reduce administrative burdens, eliminating the need to track ITR-V submissions or request condonation for delays. - Tax Residency Certificate (TRC) at the Time of Filing Returns:
NRIs are required to submit a Tax Residency Certificate (TRC) to claim tax treaty benefits and file Form 10F while submitting their returns. However, mismatches between calendar and financial years often make it difficult for NRIs to obtain a TRC at the time of filing, as foreign tax authorities do not issue residency certificates for future periods. Additionally, in some cases, the cost of acquiring a TRC may exceed the refund amount claimed. A more flexible approach, such as permitting the TRC to be submitted upon request by tax authorities, would simplify compliance and facilitate smoother tax refund claims. - Tax Payments and Refunds to Overseas Bank Accounts:
The current system permits tax payments via net banking, debit cards, NEFT/RTGS, and UPI, but these options are limited to Indian bank accounts. Additionally, NRIs who close their Indian bank accounts after leaving the country may still become eligible for refunds, which can only be credited to a pre-validated Indian bank account. Many NRIs convert their Indian accounts into Non-Resident Ordinary (NRO) accounts, which impose deposit restrictions. Moreover, they must inform banks about expected refunds, a process that is often time-consuming and may delay or prevent the timely receipt of refunds. Allowing direct tax payments and refunds to overseas bank accounts would significantly improve efficiency for NRIs.
Conclusion:
Implementing these reforms would significantly enhance the tax compliance experience for NRIs by reducing procedural difficulties, minimizing delays, and improving efficiency. These changes would not only simplify tax filing but also ensure a more seamless and equitable tax system for non-residents.
