India slashes taxes on overseas spending and eases NRI property rules
India has introduced several tax and investment reforms aimed at simplifying financial processes for residents and non-resident Indians (NRIs). The changes include lower taxes on overseas spending, relaxed rules for property buyers, and new incentives for foreign businesses operating in key sectors. These measures are designed to ease compliance and encourage investment.
One major update reduces the upfront tax collected at source (TCS) on overseas expenses. Travel, education, and medical treatments abroad will now face a 2% tax, down from previous rates. This adjustment applies to both individual travellers and those seeking medical or educational services outside India.
The government has also removed minimum tax requirements for businesses under simplified tax regimes. Sectors such as cruise ship operations and electronics manufacturing services will benefit from this change, reducing their financial burdens.
For NRIs, property transactions in India have become simpler. Buyers purchasing real estate from an NRI seller can now use their existing PAN instead of obtaining a separate Tax Deduction and Collection Account Number (TAN). Additionally, NRIs investing directly in Indian listed companies through NRE or NRO accounts can now hold up to 10% in a single company, increasing their investment flexibility.
A one-time disclosure window has been introduced for individuals to declare and regularise overseas assets. This move allows taxpayers to avoid severe penalties or prosecution by voluntarily reporting previously undeclared foreign holdings.
Foreign companies, including those based in Kuwait, will also gain from new tax exemptions. Firms supplying machinery, tools, or equipment to electronics manufacturers in designated Indian zones will not pay tax on such income until 2031. This incentive aims to boost manufacturing and attract foreign direct investment.
Despite these improvements, NRIs in Kuwait still face challenges when investing in Indian stocks. Issues such as regulatory complexities under RBI and FEMA rules, delays in fund repatriation, KYC compliance hurdles, currency risks, and restricted access to certain trading platforms remain unresolved.
The reforms simplify tax procedures for individuals and businesses while encouraging foreign investment in India's growing sectors. Lower taxes on overseas spending, relaxed property rules for NRIs, and extended exemptions for foreign suppliers are expected to improve compliance and economic participation. However, some operational challenges for NRIs, particularly in Kuwait, persist under existing financial regulations.
