The union budget 2024-25, which received mixed response from the different stratas of the country, will also affect Non-Resident Indians (NRIs) with its tax reforms.

The Indian government’s Budget 2024 by Finance Minister Nirmala Sitharaman has proposed changes for NRIs that includes increased taxes on certain gains while reductions on some. These adjustments will apply to transfers conducted on or after July 23, 2024.

The rate for short-term Securities Transaction Tax (STT) paid listed equity, equity-oriented mutual funds and units of business trust (Section 111A) has increased from 15% to 20%. Similarly, the rate for these assets for the long-term (S. 112A) has increased from 10% to 12.5%.

Listed financial assets held by the NRIs for more than a year will be classified as long-term, while unlisted financial assets and all non-financial assets will have to be held for at least two years to be classified as long-term.

Moreover, unlisted bonds and debentures, debt mutual funds and market-linked debentures, irrespective of holding period, will attract tax on capital gains at applicable rates.

To promote domestic cruise ship operations by non-residents, it is proposed to put in place a presumptive taxation regime for cruise ship operations of non-residents.

Further, it is proposed to provide exemption for any income of a foreign company from lease rentals of cruise ships, received from a related company which operates such ship(s) in India.

The exemption limit of 1 lakh for Long-Term Capital Gains (LTCG) on these assets has increased to ₹1.25 lakh. This increased exemption limit will apply for FY 2024-25 and subsequent years.

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