Income Tax News: With almost 32 million NRIs and OCIs, India now has the largest abroad diaspora in the world. This has happened in recent years. The Gulf countries continue to have the highest concentration of Indian NRIs, followed by Singapore, the US, Canada, and the UK.
Taxation Challenges for Non-Resident Indians (NRIs)
It’s important to realise that non-resident Indians (NRIs) are subject to taxation in India based on their domestic income, as many NRIs relocate overseas in search of improved employment and educational prospects.
The complexities of tax navigation for NRIs and OCIs in 2024 were brought to light by a recent survey carried out by SBNRI, an extensive investment platform for NRIs and OCIs, in response to the steady rise in NRIs. Simultaneously, the Indian government is working to make the taxing procedure easier for non-resident Indians. But even with their best efforts, NRIs still face a number of difficulties in the tax system.
A Key Challenge for NRIs and OCIs
In terms of taxation, the biggest obstacle to filing taxes as an OCI or NRI is double taxation, according to 14.11% of NRIs from Australia, 13.10% from the UK, and 8.06% from the US. According to 12.10% of US citizens, 9.05% of UK citizens, and 6.02% of Australian citizens, the biggest obstacle to filing taxes as an NRI is getting tax paperwork from outside.
The survey found that 10% of NRIs located in the US, and 7% each from Australia, Canada, and Singapore, solely report income generated in India to the Indian Tax Authorities, despite the complicated tax environment. On the other hand, 6% of respondents from Canada, 4% from the US and Singapore, and 3% from Australia said they declare to the Indian tax authorities all money they get, whether it is earned domestically or overseas.
Exploring Tax-Saving Opportunities for NRIs and OCIs
NRIs and OCIs still face difficulties when it comes to filing taxes, but the emergence of tax-saving choices offers them a tempting chance. Approximately 5% of NRIs from Canada and Singapore, and 7% of NRIs from the UK and Australia utilise the various tax-saving methods. However, just 2% of people from Australia, 4% of people from Singapore and Canada, and 6% of people from the UK are not aware of these tax-saving options.
The poll also revealed that 5% of NRIs from Singapore, 4% from the UK, and 2% from the US do not file tax returns in India, in addition to the complicated tax environment for NRIs. Just a tiny percentage of people who file choose to complete the forms on their own. Most people—12 percent in the UK, 10 percent in the US, and 7 percent in Singapore—choose to have it done for them by hiring a tax counsellor or professional.
Motivations for Overseas Residency
The main causes of Indians residing overseas were examined in SBNRI’s survey, which was conducted as the number of NRIs keeps growing. Improved job prospects were the primary motivator for residing overseas for 11% of British citizens and 9% of Canadian citizens, among other nationalities. Furthermore, the pursuit of higher education was identified as the key incentive by 9%, 6%, and 5% of respondents from Singapore, Canada, and the UK, respectively.
