NRI Current Affairs - 2020

Finance Bill, 2020 passed in Lok Sabha

On March 23, 2020, Finance Minister Nirmala Sitaraman introduced the Finance Bill, 2020. The bill was introduced and passed in Lok Sabha without any discussion.

Key Features of the Bill

The bill provides the financial proposals of the fiscal year 2020-21. With the bill being passes, the proposals made under the Union Budget 2020-21 has come into effect. The GOI proposed to spend Rs 30,42,230 crores of rupees in the financial year 2020-21. This is 12.7% more than the revised estimate of 2019-20.

NRI

Several amendments have been made to the bill. The passed bill withdrew certain features that affected non-resident Indians. It includes NRIs with income more than 15 lakhs from business owned by them in India will fall under tax net. However, their global income is not to be taxed.

The bill has abolished Dividend Distribution Tax. It is the tax imposed by the GoI on Indian Companies based on the dividend paid by them to their investors.

OCI can now apply for National Pension System

The Overseas Citizens of India (OCI) will now be eligible to apply for National Pension System (NPS) at par with Non Resident Indians (NRIs). The permission to permit OCI to enroll in NPS was given by Pension Fund Regulatory and Development Authority (PFRDA). The decision is one of the endeavours of PFRDA towards promoting and developing NPS and increasing pension coverage in country.

Key Highlights

As per a notification issued by Finance Ministry, now, any Indian citizen, resident or non-resident and OCIs are eligible to join NPS till age of 65 years.

Condition: An OCI may subscribe to NPS provided such person is eligible to invest as per provisions of PFRDA Act and accumulated saving will be repatriable, subject to Foreign Exchange Management Act (FEMA) guidelines.

Till 26th of October 2019, the total number of subscribers under National Pension System (NPS) and Atal Pension Yojana (APY) has crossed 3.18 crores and Asset under Management has grown to over Rs.3.79 lakh crore. Subscribers enrolled under NPS includes more than 66 lakh government employees and 19.2 lakhs subscribers in private sector with 6,812 entities registered as corporates.

About National Pension System (NPS)

It was initially notified for Central government employees joining service on or after 1 January 2004. The NPS was subsequently adopted by almost all State Governments for its employees and was later extended to all citizens of India (on a voluntary basis) from May 2009, to corporates in December 2011 and to Non-Resident Indians (NRI) in October 2015.

A NPS subscriber can contribute regularly in a pension account during his/her working life, withdraw a part of corpus in a lumpsum and use remaining corpus to buy an annuity to secure a regular income after retirement.

In Union Budget 2019, the tax exemption limit under section 10(12A) of IT Act, for lump sum withdrawal on exit/maturity from NPS was increased from 40% to 60%. Moreover, the remaining 40% of corpus is already tax-exempt as it is mandatorily utilised for annuity purchase.

NOTE: PFRDA is a pension regulator of India. It administers and regulates National Pension System (NPS) and also administers Atal Pension Yojana (APY). It is a statutory authority established by PFRDA Act of Parliament, to promote, regulate and ensure orderly growth of NPS and pension schemes to which this Act applies.