“Synopsis”
Union Budget 2025 has introduced some crucial updates for Non-Resident Indians (NRIs)—ranging from changes in TCS on remittances, updates in capital gains tax, to new opportunities via GIFT City. This guide simplifies what NRIs need to know and how to plan their finances smartly in light of the Budget.
Budget 2025: What’s New for NRIs?
The Indian government continues to tighten tax compliance and promote global investment through regulated routes. This year’s Budget focuses on transparency, while offering more structured investment routes and tax clarity for NRIs.
1. Higher TCS on Foreign Remittances Continues
-
Under the Liberalized Remittance Scheme (LRS), Budget 2025 continues to impose 20% TCS on foreign remittances exceeding ₹7 lakh.
-
However, lower TCS rates (5%) apply for education and medical purposes.
-
If you invest via GIFT City, TCS may be exempted or significantly reduced.
2. Capital Gains Tax – Clarified for NRIs
-
NRIs selling property in India still face TDS at 20% (with PAN) or 30% (without PAN).
-
Budget 2025 proposes simplified capital gains calculation for inherited and long-held assets.
-
Indexation benefits and adjusted cost of acquisition rules have been eased.
3. Investment Boost via GIFT City IFSC
-
NRIs can invest in global ETFs, REITs, mutual funds, and bonds through GIFT City IFSC without FEMA compliance hurdles.
-
Zero capital gains tax on certain asset classes held for a minimum duration in GIFT accounts.
-
Easier repatriation and currency conversion benefits.
4. RNOR Status and Tax Holiday for Returning NRIs
-
Budget 2025 reaffirms the 2–3 year RNOR (Resident but Not Ordinarily Resident) window for returning NRIs.
-
RNORs enjoy:
-
No tax on foreign income
-
No requirement to declare foreign assets
-
5. PAN-Aadhaar & Compliance Enforcement for NRIs
-
If NRIs do not have a valid PAN, TDS at 30% will apply on interest, dividends, and rental income.
-
PAN is mandatory for mutual fund redemptions, property sales, and large NRO transactions.
-
Aadhaar linking not required for NRIs (but exemption must be claimed).
6. Easier Startup Investing & Convertible Notes
-
FEMA rules relaxed for NRI investments in:
-
Convertible debentures
-
Angel investments in unlisted startups
-
-
Automatic route extended for up to $1 million investments.
7. No Major Change in NRE/NRO/FCNR Taxation
-
NRE/FCNR interest remains tax-free for NRIs.
-
NRO interest continues to be taxable at 30% with applicable TDS.
-
FCNR deposits allowed in major currencies like USD, GBP, EUR.
Budget Planning Tips for NRIs in 2025
-
Use Form 13 for lower TDS if selling property
-
Prefer GIFT City platforms for global investing
-
Keep your PAN active and file returns on time
-
If returning to India, use your RNOR period wisely
-
Consult a CA familiar with FEMA & DTAA rules
Conclusion
Union Budget 2025 doesn’t introduce radical reforms but makes significant refinements for NRIs. With increased transparency and smart investment routes like GIFT IFSC, NRIs can optimize their financial strategies while staying fully compliant with Indian laws.
