In recent years, India has emerged as the home of the world’s largest overseas diaspora, boasting approximately 32 million NRIs (Non-Resident Indians) and OCIs (Overseas Citizens of India). The NRI network spans across various countries, with Gulf nations hosting the largest concentration, followed by Singapore, the US, Canada, and the UK. As NRIs seek better job opportunities and education abroad, it’s important to note that they are taxed in India based on the income generated within the country.
A recent survey by SBNRI, a comprehensive investment platform for NRIs and OCIs, shed light on the complexities of taxation for NRIs and OCIs in 2024. Despite the Indian government’s efforts to streamline the taxation process for NRIs, it remains riddled with challenges.
Within the tax landscape, the survey revealed that 14.11% of NRIs from Australia, 13.10% from the UK, and 8.06% from the US identify double taxation as the foremost challenge when filing taxes as an NRI or OCI. Additionally, accessing taxation documents from abroad was cited as a significant concern by 12.10% of NRIs from the US, 9.05% from the UK, and 6.02% from Australia.
Amidst the increasing challenges, Mudit Vijayvergiya of SBNRI emphasized the growing complexity of the taxation process for NRIs and the importance of seeking guidance from experts to navigate these issues effectively.
The survey also unveiled that 10% of US-based NRIs, along with 7% from Australia, Canada, and Singapore, report only the income earned in India to the Indian Tax Authorities. In contrast, 6% from Canada, 4% from the US and Singapore, and 3% from Australia report both income earned in India and abroad to the Indian Tax authorities.
While tax filing poses significant challenges for NRIs and OCIs, there are opportunities for tax savings that many are actively leveraging. Approximately 7% of UK and Australia-based NRIs, as well as 5% from Canada and Singapore, utilize available tax-savings options. Conversely, some NRIs are unaware of such options, including 2% from Australia, 4% from Canada and Singapore, and 6% from the UK.
The survey also highlighted that 5% of NRIs from Singapore, 4% from the UK, and 2% from the US do not file tax returns in India. Among those who do, a significant majority opt to engage a tax professional or advisor to navigate the process on their behalf.
As the number of NRIs continues to grow, the primary reasons for Indians living abroad include better employment opportunities, cited by 11% from the UK and 9% from Canada, and pursuit of higher education, reported by 9%, 6%, and 5% from Singapore, Canada, and the UK, respectively.