In recent years, India has risen to a position where it boasts the world’s largest overseas diaspora, comprising approximately 32 million NRIs and OCIs. Among the diverse Indian NRI community, the Gulf countries remain the most concentrated, followed by countries like Singapore, the US, Canada, and the UK. As a significant number of NRIs move abroad in pursuit of better job opportunities and education, it’s crucial to understand that they are taxed in India based on income generated within the country.
In response to the consistent increase of NRIs, a recent survey conducted by SBNRI, a comprehensive investment platform for NRIs and OCIs, highlighted the intricacies of tax navigation for NRIs and OCIs in 2024. Concurrently, the Indian government is striving to streamline the taxation process for NRIs. However, despite their diligent efforts, the tax landscape for NRIs remains fraught with various challenges.
In the realm of taxation, 14.11% of NRIs from Australia, followed by 13.10% from the UK, and 8.06% from the US consider double taxation as the major challenge when filing taxes as an NRI or OCI. Meanwhile, 12.10% from the US, 9.05% from the UK, and 6.02% from Australia identified obtaining taxation documents from overseas as the most significant hurdle in filing taxes as NRIs.
Amidst the rising challenges for filing taxes as NRIs, Mudit Vijayvergiya of SBNRI, commented, “While, the process of filing taxes for NRIs has been subjected to multiple revisions, aimed at making it more streamlined and simpler, the proliferation of tax-related issues has only grown further. Having witnessed NRIs grapple with the complex nuances of the taxation process, it’s paramount to partner with experts who can guide them through this journey, mitigating any sort of disparities.”
Amidst the complex taxation environment, the survey revealed that 10% of NRIs based in the US, followed by 7% from Australia, Canada, and Singapore, respectively, only report income earned in India to the Indian Tax Authorities. In contrast, 6% from Canada, 4% from the US and Singapore, and 3% from Australia disclosed that they report both their income earned in India and abroad to the Indian tax authorities.
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Filing taxes remains a challenging issue for NRIs and OCIs, but the rise of tax-saving options presents an attractive opportunity for them. About 7% of NRIs from the UK and Australia, as well as 5% from Canada and Singapore, take advantage of available tax-saving options. In contrast, only 2% from Australia, 4% from Canada and Singapore, and 6% from the UK are unaware of these tax-saving opportunities.
Beyond the complex tax environment for NRIs, the survey also found that 5% of NRIs from Singapore, 4% from the UK, and 2% from the US do not file tax returns in India. Among those who do file, only a small fraction prefer to do it themselves by completing the forms. The majority, specifically 12% from the UK, along with 10% and 7% from the US and Singapore respectively, opt to hire a tax professional or advisor to handle it on their behalf.
As the number of NRIs continues to rise, SBNRI’s survey delved into the primary reasons for Indians living abroad. For 11% from the UK and 9% from Canada, among others, better employment opportunities were the main driving factor for living abroad. Additionally, pursuing higher education emerged as a primary reason, with 9%, 6%, and 5% from Singapore, Canada, and the UK respectively selecting this as their main motivation.
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Published: 25 Mar 2024, 12:01 PM IST