Saturday 01 / February / 2025
Muscat: The Indian diaspora were keen on the announcements in the Indian Union budget presented by the Finance Minister, Nirmala Sitharaman on Saturday.
They are largely disappointed as there is nothing much in the budget for the common Non Resident Indians.
Speaking to Times of Oman, R. Madhusoodanan, former SBI and a financial expert based in Muscat said that the Union budget did not meet the expectations of NRIs and hence they are largely disappointed.
“The Indians living abroad have sent about $129.1 billion in 2024 supporting the Indian economy. However, their long pending demands which include investment friendly reforms, simplified regulations, a comprehensive social security scheme under one umbrella for the migrant workers, participation in the popular small savings schemes of the Government, discriminatory treatment on taxations, a solution for the excessive airfare during seasonal and festival times, etc were not considered. On the other hand, the Union budget introduced stricter tax rules for NRIs including students and professionals working abroad. Students working in the UK, US, Canada, Australia etc will face more reporting formalities and tax obligations. No doubt, a more complicated financial future for NRIs, though this initiative is to align with global standards,” Madhusoodanan said.
Managing Director, LuLu Financial Holdings, Adeeb Ahamed, said: “The Union Budget 2025-26 is clearly designed to boost short-term consumption, with the decision to remove Income Tax on income up to ₹12 lakh standing out as a direct move to increase middle-class spending power. This is expected to stimulate demand, especially in sectors like real estate, retail, and automobiles, which benefit from increased disposable income."
He also said, “It is commendable that FDI in the insurance sector will be raised from 74% to 100%, a move that will attract foreign capital, enhance competition, and drive innovation in the sector. Similarly, the decision to increase the TCS exemption limit for remittances under the RBI’s Liberalised Remittance Scheme from ₹7 lakh to ₹10 lakh will provide relief to individuals sending money abroad, particularly for travel and investment purposes.”
Additionally, Adeeb Ahamed said that the removal of TCS on remittances for education purposes when financed by an education loan is a positive step that will ease the financial burden on students studying abroad. “It is encouraging to see MSMEs receiving strong focus, rightly recognized as one of the key engines of India’s growth. Measures such as enhancing the credit guarantee cover, increasing investment and turnover limits, and boosting loans for export MSMEs will help bridge the credit gap and support expansion. However, while there was a lot of talk about financial sector reforms, the actual measures announced do not fully reflect this ambition. The revamped central KYC registry is a step in the right direction, emphasizing the need for regulatory frameworks to evolve with technological advancements. However, one hopes that more concrete steps will be announced soon to enhance financial sector resilience and growth. Overall, this is a populist budget that provides welcome relief to the middle class and MSMEs but leaves room for stronger action in key areas. Hopefully, follow-up measures will address these gaps in the coming months,” he said.
Madhusoodanan also said, “To attract NRI investments, alignment has been done in respect of Long terms capital gains rates, reduction of holding period for long term assets, bonds and investments from 36 months to 24 months, proposed presumptive taxation regime for certain foreign entities, changes in the Liberalized Remittances Scheme(LRS) are changes proposed in the taxation front among other things. Like residents, NRIs are also benefited out of the new income tax upward revision on the basic exemption limit of Rs 12 lakhs from the existing Rs 7 lakhs and also the benefits due to the revised tax slabs, on their domestic income.”
Madhusoodanan also added, that the INR will continue to be under pressure in the short run on account of the rates hold and hawkish stand of US Fed and the US trade and tariff policies. “Forex outflow is continuing and the budget disappointed the stock market as well. Despite the highest ever inward remittances of over US129 billion in 2024, the Forex reserve declined from $704.90 billion in September 2024, to $624 billion, the lowest since March 2024. The depreciation of INR is beneficial to the Indian diaspora as well as exporters as they get more value for their earnings. The RBI review scheduled for next week will give directions on the rupee movements. The 100% FDI on Insurance, containing the fiscal deficit to 4.4% GDP, the Government’s commitment to doing ease of business, the Urban reforms increase in capex growth by 10%, sops in agriculture, MSME etc are positives for the economy,” he said.
While the common NRIs are unhappy, the Indian middle class are happy on the budget particularly due to the bonanza on the personal taxation front. “Now let us wait for the tax reform announcements scheduled for next week,” Madhusoodanan concluded.
