Real estate insiders said the tax hike move may also see both developers and investors opting for payments in cryptocurrencies – at least partly – for real estate assets
From July 1, 2023 there will be a new tax system to remit money abroad. Under the new system Indian residents sending money overseas have to pay 20 per cent tax instead of the earlier scheme of 5 per cent.
In a recent announcement India’s finance minister Nirmala Sitharaman announced the steep tax increase on money remitted abroad under the Liberalised Remittance Scheme (LRS).
The announcement was part of the Union Budget 2023, which will be applicable from July 1.
The rule will also affect those Non-Resident-Indians who remit money to their country of residence to do business or purchase property etc.
Real estate insiders said the tax hike move may also see both developers and investors opting for payments in cryptocurrencies – at least partly – for real estate assets.
A host of big names among leading UAE developers including Danube and Damac are learnt to be holding road shows in various Indian cities for marketing their residential properties to cash rich Indians.
“It’s important to note that this tax is not an additional tax and can be claimed back or settled against your other tax liabilities. However, this refund could take time and, therefore, at the very least, it’s a significant cash flow issue for most remitters,” a report in Financial Express said.
“While seemingly aimed at high net-worth individuals, the rule will affect everyone – Indians remitted $19.6 billion in 2021-22, according to data from the Reserve Bank of India.
For example, if you live in the country but send money abroad to a family member abroad, you will have to budget for this tax, and then claim/settle it later. The same goes for investors wanting to diversify their portfolio by investing in overseas markets. The government also intends to bring credit card payments made for overseas trips under the LRS tax net. Overall, the new rule is a big dampener for any Indian resident looking to remit money overseas,” the report said.
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