How GST impacts NRIs

GST (Goods and Services Tax) is one of the hottest and most debatable topics these days that interests every resident Indians and NRIs alike. Since its announcement on July 1, 2017, the GST has become a cause of concern for everyone as it is related to the purchase of each and every commodity along with many services. 

Let’s go through the information about GST first before knowing more about its impact on NRIs. 

What is GST?

Simply put, a type of tax that has replaced twenty different types of taxes, including central excise tax, services tax, and octroi, etc. levied by different departments on several good and services, are replaced by unified Goods and Service Tax aka GST. This revised update and the biggest tax reform to date has reduced all taxes up to 18% only. It has enforced the system of “one country, one law”.

An interesting fact: Earlier, the taxes were calculated excluding the discounts, if any. But, GST is calculated including any discount, on the actual (Maximum Retail Price) MRP.

How is GST beneficial for Non-Resident Indians (NRIs)?

Reduced taxes on property: The good news for NRIs is that the tax on houses and small SUVs are reduced to 18%, that previously ranged between 30% to 44%. This proves that NRIs investing in property or business can get a higher ROI. In a way, NRIs can keep safeguarding the capital gains in their NRE/ NRO/ FCNR accounts.

Hassle-free tax payment: The declaration of GST marked with the digitization of services as well. Now, NRIs can simply register themselves on GST portal with their PAN number details and can pay the tax online without taking help of agents.

No black money: While calculating GST, the sales of every commodity will be entered online, this reduces corruption and other malpractices. It further helps to reduce the chances of parking black money.

Reduced taxes: The taxes on the highly taxed products, commodities and services are reduced up to 18% only. Further, they have to calculate only tax, which is not at all tough task for the NRIs. 

Cons of GST for NRIs

Everything comes with a price. So, when benefits of GST bill prove to be profitable for NRIs, they have a few limitations as well.

Money transfers are costlier: GST will be applied to the amount of money that NRIs will be sending in the Indian accounts.

Outsourcing gifts are expensive: For NRIs, GST of 12.36% is applicable for facilitating remittances or outsourcing the gifts to your natives in India.

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