Why NRIs Should Pay Attention to These Changes
For NRIs looking to invest in India, understanding the latest capital gains tax reforms is crucial. These changes impact real estate, mutual funds, and equity investments, offering both challenges and opportunities. Proactive tax planning can help NRIs minimize liabilities, optimize returns, and ensure compliance with Indian tax laws. Our firm specializes in customized tax planning and investment strategies to help NRIs navigate these reforms efficiently.
- Increase in Long-Term Capital Gains (LTCG) Exemption Threshold
The LTCG exemption limit has increased from Rs 1 lakh to Rs 1.25 lakh, allowing higher tax-free gains for long-term investors.
Impact for NRIs:
- NRIs investing in Indian equities and mutual funds should check if this increased exemption applies to them.
- TDS on LTCG remains a factor for NRIs, so professional tax planning is essential to reduce liability.
- Our investment advisory services can help you navigate these tax rules efficiently and take advantage of DTAA provisions to lower taxes.
- Revision of LTCG Tax Rate
The tax rate on LTCG exceeding Rs 1.25 lakh has been raised from 10% to 12.5%. While this might seem like an increase, the higher exemption reduces the impact for moderate investors.
Example:
If an investor earns Rs 2 lakh in LTCG:
- Previous Regime: Tax on Rs 1 lakh at 10% = Rs 10,000
- New Regime: Tax on Rs 0.75 lakh at 12.5% = Rs 9,375
For NRIs:
- TDS on LTCG for NRIs remains at 10%, which may not reflect the new tax rate adjustment.
- DTAA benefits can potentially reduce tax burdens on capital gains.
- Our experts can assist NRIs in structuring investments for maximum tax efficiency.
- Changes to Capital Gains Tax on Real Estate
The LTCG tax rate on property sales has been reduced from 20% to 12.5%, but the indexation benefit has been removed.
Impact on NRIs:
- TDS on property sales remains at 20% without lower deduction certificate, which can impact cash flow.
- Example: Previously, a property sold for Rs 1 crore with an indexed cost of Rs 70 lakh would have a taxable gain of Rs 30 lakh taxed at 20% (Rs 6 lakh). Without indexation, the taxable gain may be much higher, even though the tax rate is lower.
- Repatriation & FEMA Compliance: NRIs must obtain FEMA clearance and a tax compliance certificate before transferring sale proceeds abroad.
- Strategic Tax Planning is Key: Our real estate advisory services help NRIs minimize tax burdens and ensure smooth repatriation.
- Abolition of Angel Tax
Angel Tax, which previously applied to investments in startups and unlisted companies, has been abolished.
Opportunities for NRIs:
- NRIs can now invest more freely in Indian startups without tax complications.
- However, FEMA restrictions still apply, and investment limits must be considered.
- Our startup investment consultancy ensures NRIs remain compliant while benefiting from India’s growing entrepreneurial ecosystem.
- Removal of TDS on Mutual Fund Withdrawals
TDS on mutual fund redemptions has been abolished for residents, but NRIs continue to face TDS at 10-30%.
What NRIs Should Consider:
- DTAA benefits can reduce double taxation on mutual fund gains.
- Proper structuring of investments can help avoid excessive tax deductions.
- Our wealth management experts specialize in optimizing NRI investment portfolios to minimize tax burdens.
How Our Services Can Help NRIs
These tax changes bring both opportunities and complexities for NRIs investing in India. Our team offers comprehensive financial planning, tax advisory, and investment management tailored specifically for NRIs.
🔹 Investment Planning: Maximize returns with a tax-efficient portfolio.
🔹 Real Estate Advisory: Reduce TDS on property sales and manage repatriation effectively.
🔹 Tax Optimization: Utilize DTAA benefits to minimize global tax liability.
🔹 Startup Investments: Leverage new tax-free startup investment opportunities.
Get Expert Guidance Today!
If you’re an NRI looking to invest in India, our specialized tax and investment advisory ensures you remain compliant while maximizing profits. Contact us today for a personalized consultation and take advantage of these new tax reforms.
