India's economic environment is currently at the forefront of discussion, especially surrounding policies and regulations affecting both property transactions for Non-Resident Indians (NRIs) and public health related to ultra-processed foods (UPFs). The upcoming Budget 2025 is eagerly awaited for potential simplifications to compliance processes for NRIs selling properties, alongside necessary regulatory measures for food labelling.
Transactions involving non-resident sellers are fraught with complexity, primarily due to tax withholding compliance challenges. NRIs must navigate obtaining Tax Deduction and Collection Account Numbers (TAN), deducing tax at source when processing property sales, and filing necessary e-TDS returns. All of this adds up to make what should be straightforward transactions extremely cumbersome. The government aims to address these hurdles through simplification measures as called for by industry experts.
The last full budget, presented in July 2024, introduced significant amendments to capital gains tax provisions, including the abrupt removal of the indexation benefit for long-term capital gains on immovable property transactions post-July 22, 2024, and reduced long-term capital gains tax from 20% to 12.5%. To add to the confusion, NRI sellers do not enjoy the same benefits as resident taxpayers, meaning they need to be particularly cognizant of these changes impacting their sale processes.
To streamline transactions, experts are advocating for several key changes. A simplified, PAN-based challan-cum-return Form for TDS compliance specific to NRIs is one suggested approach, which mirrors what resident sellers presently utilize. This adjustment could substantially ease the transactional burden, aiding buyers and sellers alike. An additional suggestion is to enforce a flat TDS rate for NRI property sellers, which could help clarify tax obligations and ease administrative efforts.
There are also pressing issues surrounding the refunds NRIs may be entitled to due to excess tax deductions upon the sale of their properties. Currently, leniency is required as these individuals often have to resort to maintaining active Indian bank accounts just to receive their refunds. It has been suggested allowing foreign bank accounts for PAN holders granted NRI status would alleviate this difficulty.
Meanwhile, the Economic Survey has been vocal on another front – the growing health dilemma posed by UPFs. The report emphasizes the importance of perspicuous labelling regulations, criticizing the misleading advertisements and subtle marketing tactics utilized by the ultra-processed food sector, which often attract younger consumers.
Highlighting the health risks associated with UPF consumption, which range from increased diabetes and cardiovascular diseases to impacting mental health, the Economic Survey linked these concerns with the essence of India's future economic wellbeing. “It is not an exaggeration to suggest the country's future growth potential rides on this measure,” states the Survey, advocating for stringent labelling to enable healthier consumer choices, especially among children and adolescents.
Industry observers recognize the vast size of the ultra-processed food segment, which was valued at approximately Rs 2,500 billion as of 2021. Alarmingly, the report elucidated the ineffectiveness of self-regulation within the food sector, reflecting on the urgent need for regulatory interventions to safeguard public health. Strong labelling regulations would empower consumers to make informed dietary choices, steering them away from products high in sugar, fat, and salt.
With initiatives like Eat Right India and the Fit India Movement already underway to promote healthier lifestyles, the call for stringent food regulations complements broader efforts to improve public dietary habits and overall well-being.
Both these narratives converge to create the larger picture – the interaction between economic policy, public health, and the socio-economic fabric of India. Whether it’s about easing the selling of properties for NRIs or ensuring stringent health regulations on food, these regulatory measures are imperative. They will not only facilitate smoother transactions and healthier choices but are also foundational to bolstering the country's economic growth. The decisions made during Budget 2025 will likely play a significant role, shaping how both NRIs and consumers navigate these complex challenges moving forward.