Higher tax for NRIs: Indian expats in UAE pin hopes on post-budget debate

Dubai: Indian expats in the UAE say they are disappointed after India’s Union Budget 2025, presented on Saturday, failed to address their demand for tax parity in capital gains from property sales.

Despite lobbying by community organisations and appeals to India’s Finance Minister Nirmala Sitharaman, the budget announced on Saturday made no reference to the issue, leaving Non Resident Indians (NRIs) in the UAE and elsewhere disappointed.

They are now looking forward to Members of Parliament (MPs) taking up their plea during post-budget discussions set to begin in Parliament on Monday.

Indian expats had urged the government to grant them the same tax benefits as resident Indians, particularly the option to choose between a 20 per cent tax rate with indexation or a 12.5 per cent flat tax rate on long-term capital gains from property sales. Since last July, NRIs have only been allowed the flat 12.5 per cent tax without indexation, leading to a significantly higher tax burden.

“This was an opportunity for the government to correct an unfair policy that affects thousands of NRIs investing in Indian real estate,” said Paul T Joseph, president of AKCAF Association. “The silence on this issue in the budget is disappointing,” he said.

Community groups had mobilised a campaign before the budget presentation, with multiple letters sent to the Finance Ministry and various MPs, advocating for equal treatment under India’s tax laws.

“We did email the Finance Ministry appealing for tax parity after realising how last year’s amendment is affecting NRIs when they sell their properties back home,” he said.

The letter sent by many such community organisations highlights that NRIs have always invested in Indian real estate expecting fair treatment. However, the amendment has created an “unjust disparity” that burdens them with higher taxes despite their significant contributions to India’s economy through remittances and investments. In fact, the four-million-strong Indian community in the UAE is the second largest contributor to the Foreign Exchange Remittances into India which touched a record $125 billion last year.

However, Joseph believes that the campaign did not have the desired impact as it had gained momentum just days before the budge. “I think we should have done it a little earlier. Now, we are focusing on lobbying through senior politicians. We still hope the government will look into it,” he added.

Following the budget’s omission of the NRI tax issue, many expatriates are now pinning their hopes on the parliamentary discussions. They are encouraged by last year’s post-budget deliberations, where MPs successfully lobbied for the indexation benefit to be reinstated as an optional choice. Notably, Punjab MP Raghav Chaddha’s speech, which became viral later, reportedly played a crucial role in persuading the government to reconsider its stance then.

“We have seen before that parliamentary debates can influence policy changes,” said Nissar Thalangara, president of the Indian Association Sharjah, which has also taken up the cause through parliamentarians.

MPs from Kerala like Haris Beeran, Hibi Eden and KC Venugopal have already shown support for NRIs, taking it up with the Finance Minister. “We trust they will advocate for us during the budget debate as well. This [tax parity] was a gift that the government could have given to the NRIs who are usually ignored in the budgets. Let’s hope the government will realise it during the debate at least,” said Thalangara.

Community leaders are urging NRIs to continue engaging with MPs, with the belief that sustained pressure could lead to a reconsideration of the tax policy.

If the government does not amend the tax rules post-budget, legal action remains an option for affected NRIs, said chartered accountant Sreejith Kuniyil, who has been at the forefront of the tax parity movement.

“Several expat community groups in the UAE and across the Gulf remain hopeful that their voices will be heard and that policymakers will take corrective measures to ensure fair treatment under India’s new tax laws. We are not giving up. If the government does not act after the parliamentary discussions, we will have to continue the legal fight,” said Kuniyil, who had helped an aggrieved NRI in Kuwait to file a writ petition in the Kerala High Court and has been collecting the pleas of NRI community associations to the ministry as additional affidavits in the case.