NRIs form a major part of India’s GDP, they are also a huge part of the real estate industry. The budget made specific announcments in regards to NRIs, how does it help Realty market lets see.
By Varun Singh
NRIs are among the most important drivers of residential and commercial real estate in the country.
Builders are hopeful that NRIs because of budget SOPs will invest in real estate.
Anuj Puri, Chairman of Anarock Property Consultants says, “As such, the NRI community had high expectations from Union Budget 2021-22 – and while the hoped-for key tax reforms did not materialize, they were not disappointed.”
As per the World Bank, India is said to have received inward remittances of approx. USD 75.9 Bn in 2020, which is nearly 2.9% of the overall GDP.
Hence, experts say that NRIs cannot be sidelined.
What did the budget offer NRIs?
- In a major positive move to incentivise overall entrepreneurship in the country, the government has now allowed NRIs to incorporate one-person companies (OPCs) in India. This doesn’t just help start-ups and innovators – it will also encourage NRIs with the entrepreneurial capabilities to enter the Indian market and participate in Digital India’s growth story. It will also boost investments across sectors.
- In a major relaxation to NRIs – especially the white-collar professionals – the government proposes to eliminate double taxation for them on foreign retirement funds. When NRIs return to India, they face challenges with their accrued incomes in their foreign retirement accounts, usually due to a mismatch in taxation periods. They also struggle with getting credit for Indian taxes in foreign jurisdictions. The government proposes to notify rules for removing the hardship of double taxation.
- The FM also reduced the time limit for reopening of income tax assessment cases to three years from the previous six years (10 years for serious tax fraud cases involving concealment of INR 50 lakh or more). This will give relief to innocent NRIs who were sometimes pulled up for alleged tax evasion in previous years, resulting in lengthy litigation.
- The government’s latest push for affordable housing also bodes well for NRIs. To boost this segment, the govt. extended the period for extra deduction of INR 1.5 lakh available for loans up to 31st March 2022. The move will keep demand buoyant for affordable housing in 2021, as well.
“A generous pipeline of housing supply by branded developers assures NRIs of reliable investment options even in affordable housing. The rental yields of budget housing are currently better than in any other budget segment, including luxury real estate,” says Puri.
Builders say that the budget has removed the hardships of the NRI community.
Ajay Kapoor, CEO, Adhiraj Constructions, says, “Hardships for NRIs are also resolved with the removal of double taxation, allowing them to be stress-free while house hunting in micro markets of their choice.”
Nish Bhatt, Founder & CEO, Millwood Kane International – an investment consulting firm says, ““The government has given the NRI community its due by allowing them to operate ‘One Person Companies’ or OPCs in India, increasing the threshold for tax audit to Rs 10CR vs Rs 5 CR currently, most importantly notifying rules to eliminate double taxation on foreign retirement funds.”
Manoj Gaur, CMD, Gaurs Group, says, “Elimination of double tax for NRIs on foreign retirement funds will encourage NRIs to invest in real estate assets.”