UAE NRIs face key India tax, banking and travel changes in August

Dubai: UAE-based NRIs with taxable business or professional income in India face an important filing deadline this month, while an interest rate decision and changes to banking and railway services could also affect their finances and travel plans.

The Reserve Bank of India (RBI) will announce its next monetary policy decision on August 5. Indian Railways has introduced a new system for Tatkal bookings at reservation counters, while selected bank fees and credit card benefits are set to change later in the month.

Here is what NRIs in the UAE need to know.

The deadline to file income tax returns for Assessment Year 2026-27 is August 31 for taxpayers covered by the extended non-audit filing timeline.

For NRIs, this may include individuals required to use ITR-3 because they earned taxable income from a business or profession in India and their accounts do not require an audit.

Taxpayers who miss the deadline could face a late filing fee of up to Rs5,000 under Section 234F. Interest may also apply to unpaid tax under Section 234A.

NRIs should check the return form carefully. ITR-4, also known as Sugam, is restricted to eligible resident taxpayers and cannot be used by non-resident Indians, according to the Income Tax Department.

The presumptive taxation provisions under Sections 44AD and 44ADA also apply only to eligible resident taxpayers. An NRI with business or professional income may have to use ITR-3 and calculate taxable income under the applicable rules.

The filing requirement will depend on the person’s residential status, type of income and whether the accounts are subject to audit. NRIs should also ensure that the selected return correctly reports income such as rent, capital gains, interest and business earnings taxable in India.

The RBI’s Monetary Policy Committee meeting begins on August 3, with its decision scheduled for August 5.

The outcome could affect NRIs who hold deposits or loans in India. Changes in the policy rate and banking-system liquidity can influence home loan rates, equated monthly instalments and returns offered on fixed deposits.

A recent report suggested that the central bank could leave its policy rates unchanged, with inflation expected to remain above 5% over the next two quarters and economic growth projected to stay strong.

Analysts cited in the report said the RBI may retain a cautious approach because of oil-price volatility, pressure on the rupee and movements in global investment flows.

The decision will be relevant to NRIs considering whether to renew an Indian fixed deposit or take a rupee-denominated home loan. Banks do not always revise their lending and deposit rates immediately after an RBI decision, so customers will need to check the rates offered by their lender.

Indian Railways introduced a token-based system for Tatkal ticket bookings at reservation counters from August 1.

The system is intended to organise queues, reduce overcrowding and improve the booking experience at physical reservation counters.

The change could matter to UAE-based Indians planning journeys during visits home, particularly during busy travel periods when Tatkal tickets are in high demand.

Travellers intending to make a counter booking should check the procedure and required identification before visiting the station.

Several Indian banks are expected to revise selected service charges during August. The changes may cover debit card annual maintenance fees, transaction fees and other account-related costs.

NRIs maintaining NRE or NRO accounts should check notices sent by their bank rather than assume that existing charges will continue. The revised fees may vary by bank, account category and card type.

For instance, Axis Bank credit card’s Dynamic Currency Conversion markup will rise from 1.5% to 2% from August 28. Dynamic Currency Conversion allows an overseas card transaction to be displayed and charged in the cardholder’s home currency instead of the merchant’s local currency.

Reward points will no longer be available on toll-related transactions and gift card purchases. UAE residents holding the card should review the revised terms before using it for dirham transactions or other spending outside India.

– With inputs from IANS