How India's financial reforms will affect NRIs
The Indian financial year begins on April 1 every year. The Financial Year (FY) 2025 marks the implementation of several important changes in the Indian financial system. While the regulatory changes aim to improve transparency, compliant and investor protection across various financial products and services, the relief in direct taxation gives a big bonanza to all sections of the society.
Therefore, it is very important for the Indian diaspora living abroad to know the changes that are affecting them from April 2025. Though there are many changes taking place in the Indian financial system, those concerning the Non-Resident Indians are summarized below.
1. Changes in Income Tax Basic Exemption Limit and Tax Slabs
The Union budget presented in the Indian Parliament on February 1, 2025, by the Finance Minister Nirmala Sitharaman was a big bonanza to the salaried and middle-income groups in respect of income tax reliefs. NRIs also partially benefitted from the new tax rules effective from the financial year 2025-26. Accordingly, the basic exemption limit under the new tax regime has been enhanced from Rs 3 lakhs to Rs 4 lakhs for the NRIs on their domestic income, while income on their NRE accounts is fully exempted. The reduced tax slabs also apply to the domestic income of NRIs. Undoubtedly this is a big relief to the NRIs who have income in India, for which the applicable tax has to be paid by them.
2. UPI Deactivation
A large number of NRIs living in the Sultanate of Oman use the UPI payment system like G-Pay, Paytm, etc. As part of enhanced security, the National Payment Corporation of India (NPCI) has decided to deactivate the dormant and inoperative mobile numbers. Therefore, NRIs to ensure that their Indian Bank accounts are linked to an active mobile number to avail the services.
3. Minimum Balance in Savings Bank Accounts
Major Banks like State Bank of India, Punjab National Bank, Canara Bank, decided to implement minimum balances in Savings Bank (SB) accounts. The minimum amount may vary from metro and non-metro centres. Non-maintenance of the minimum balance will result in penalties. The low-income group of NRIs to take note of the above changes and to maintain the required minimum balances to avoid penal charges.
4. Higher charges of ATM withdrawals
Effective from May 1, 2025, banks may charge Rs 23- per ATM withdrawal made on other bank ATMs in excess of the monthly prescribed limit of three instances in metro centres and five instances on non-metro centres. The NRIs and their family members may encourage the use of internet banking and UPI services in lieu of cash transactions.
5. Re-confirmation for cheques above Rs 50,000
If you are issuing cheques worth above Rs 50,000 - the details of such cheques are to be informed to your bank through email communication. This reconfirmation system is called the Positive Pay System (PPS) and was introduced to prevent fraud. Therefore, the NRIs are advised to use maximum digital transactions like NEFT/UPI payments to avoid inconveniences in this regard.
6. Higher limit of Liberalized Remittance Scheme (LRS)
The Tax Collected at Source (TCS) limit for foreign remittances from India has been revised from Rs 7 lakhs to Rs 10 lakhs. No tax for taxes for remittance towards education purposes, if the loan is availed from approved institutions. This change is effective from the April 1, 2025.
7. Updating of Know Your Customer (KYC) records
This is compulsory for Mutual Fund investments. Nominee re-verification is also made mandatory. Those who have not linked their Aadhaar with PAN will not receive dividend income, and also this will not get reflected in your tax statement viz 26AS.
8. Credit cards
Most of the NRIs have credit cards issued by Indian Banks. Major Banks have decided to reduce the complimentary benefits available to the cardholders. Now onwards, there will not be any loyalty points on certain payments using the credit card or a cut in the existing reward points.
The above list is not exhaustive. The changes made in the Indian financial system are affecting the financial and non-financial areas of Indians living abroad. Lack of understanding or awareness of the changes brought in, may lead to unpleasant situations on a future date. Please remember the phrase 'ignorance of rule is not an excuse'.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Muscat Daily
21 hours ago
- Muscat Daily
UK-bound Air India flight with 242 aboard crashes in western India
Ahmedabad – A London-bound Air India passenger flight carrying 242 people crashed Thursday shortly after takeoff from Sardar Vallabhbhai Patel International Airport in the western Indian state of Gujarat, local authorities said. The aircraft went down in a residential area of Meghaninagar, Ahmedabad, after departing at 1.39 p.m. local time (0809GMT). Emergency services rushed to the scene, and fears of casualties remain high, though officials have not confirmed any numbers yet. India's Directorate General of Civil Aviation (DGCA) said the aircraft was carrying 242 people, including two pilots and 10 cabin crew members. According to the DGCA, the aircraft issued a Mayday call to the air traffic control (ATC) shortly after takeoff but did not respond to further communications. Air India confirmed the crash, stating that Flight AI171, bound for London Gatwick, was involved in 'an incident' after departing Ahmedabad. Of 242 people aboard, the airliner said 169 were Indian nationals, plus 53 UK citizens, seven from Portugal and one was from Canada, in addition to two pilots and 10 cabin crew. The Indian Civil Aviation Ministry said it has established an Operational Control Room to coordinate all details. Massive rescue and relief operations are going on and authorities have deployed personnel to clear the debris, while the Sardar Vallabhbhai Patel International Airport has closed all its operations in the wake of the crash. Gatwick Airport officials said the aircraft had been scheduled to land in London at 6.25 pm local time (1825GMT). Air India Chairman N. Chandrasekaran expressed 'profound sorrow' over the crash. 'Our primary focus is on supporting all the affected people and their families,' he said in a statement. 'We are doing everything in our power to assist the emergency response teams at the site and provide all necessary support and care.' Indian lawmaker Yusuf Pathan called the crash 'shocking' and offered prayers for the safety of those onboard. British Prime Minister Keir Starmer said the crash was 'devastating.' 'My thoughts are with the passengers and their families at this deeply distressing time,' he said on X. UK Foreign Secretary David Lammy also 'deep sadness' over the plane crash. 'The UK is working with local authorities in India to urgently establish the facts and provide support,' Lammy said on X.
Muscat Daily
3 days ago
- Muscat Daily
Italy: Low turnout sinks citizenship, labour referendums
Rome, Italy – Italian citizenship and labour reform referendums look likely to fail due to low voter turnout. As two-day voting wound down in Europe's fourth-largest economy only about 30% of Italy's 51mn eligible voters had turned out to cast ballots in five referendums championed by centre-left opposition groups as well as the country's labour unions. Referendums require 50% plus one voter participation to be legally binding in Italy. The result is seen as a major victory for Prime Minister Giorgia Meloni, who vehemently opposed the measures. Meloni arrived at a Rome polling station on Sunday – when turnout was 22% – to declare that she would not cast a vote. Meloni then once-again encouraged her supporters to likewise boycott the ballot. The referendums Four of the referendums centred on workplace protections including better protections against firing, increased severance pay, unemployment benefits, the end of fixed-term contracts and better workplace accident compensation. A fifth referendum addressed whether voters wanted to ease citizenship laws in the country, allowing non-EU immigrants to apply for Italian passports after five rather than the current 10 years. At the moment, the rule would apply to roughly 2.5mn non-EU immigrants. Arguments for easing citizenship requirements were driven by the demographic fact of Italy's dwindling birth rates and calls for better integrating foreign workers in an effort to boost the country's economy. Data compiled by the polling organisation YouTrend said voter turnout was higher in the country's industrialised north than the agricultural south, as well in cities and in areas where left-leaning parties preformed best in Italy's most recent general and EU elections. 'The opposition wanted to turn this into a referendum on the Meloni government,' said Cabinet undersecretary and Meloni ally Giovanbattista Fazzolari. 'The response is very clear: The government emerges from this stronger and the opposition weaker.' Speaking of the vote's failure, YouTrend's Lorenzo Pregliasco said: 'Whether just above 30% or just below, this is a low figure… below the expectations and targets set by the promoters.' DW
Observer
6 days ago
- Observer
UK and India discuss cooperation amidst Lammy's visit
NEW DELHI: Britain and India on Saturday discussed expanding their "counter-terrorism" collaboration following recent fighting between India and Pakistan, Britain's foreign minister said after meeting Indian Prime Minister Narendra Modi. British foreign minister David Lammy is the highest-profile Western official to have visited both New Delhi and Islamabad since the South Asian neighbours agreed to a ceasefire last month after their worst fighting in nearly three decades. The latest tensions began in April after the killing of 26 men in Indian Kashmir that New Delhi blamed on "terrorists" backed by Pakistan, a charge Islamabad denied. India then attacked what it called "terrorist infrastructure" in Pakistan, leading to escalation from both sides until a May 10 ceasefire. "We want the situation to be maintained, but of course we recognise fragility, particularly in the backdrop of terrorism, terrorism designed to destabilise India," Lammy said in an interview at the residence of the British High Commissioner in New Delhi. "We are keen to continue to work with our Indian partners on counter-terrorism measures." He said he discussed the next steps with both Modi and Indian Foreign Minister S Jaishankar, but gave no specifics. Last year, India and Britain discussed combating the financing of terrorism, cooperation between law enforcement and judicial bodies; and information sharing. Lammy said he also discussed boosting trade between the world's fifth and sixth largest economies. The countries concluded talks for a free trade deal early last month. "I know that Prime Minister Keir Starmer is very much looking forward to coming to India very soon to sign the free trade agreement," Lammy said. "There is so much that our two nations can continue to do together." Meanwhile, Canadian Prime Minister Mark Carney invited his Indian counterpart Narendra Modi to the upcoming Group of Seven summit in a phone call, as the two sides look to mend ties after relations soured in the past two years. The leaders agreed to remain in contact and looked forward to meeting at the G7 summit later this month, a readout from Carney's office said. India is not a G7 member but can be invited as a guest to its annual gathering, which will be held this year in Kananaskis in the Canadian province of Alberta, from June 15 to 17. "Glad to receive a call from Prime Minister (Carney)... thanked him for the invitation to the G7 Summit," Modi said in a post on X. Modi also stated in his post on Friday that India and Canada would work together "with renewed vigour, guided by mutual respect and shared interests." Bilateral ties deteriorated after Canada accused India of involvement in a murder and of attempting to interfere in two recent elections. Canada expelled several top Indian diplomats and consular officials in October 2024 after linking them to the murder and alleged a broader effort to target Indian dissidents in Canada. New Delhi has denied the allegations and expelled the same number of Canadian diplomats in response. India is Canada's 10th largest trading partner and Canada is the biggest exporter of pulses, including lentils, to India. Carney, who is trying to diversify trade away from the United States, said it made sense for the G7 to invite India, since it had the fifth-largest economy in the world and was at the heart of a number of supply chains. "In addition, bilaterally, we have now agreed, importantly, to continued law enforcement dialogue, so there's been some progress on that, that recognises issues of accountability. I extended the invitation to Prime Minister Modi in that context," he told reporters in Ottawa. — Reuters
