Budget 2025: What Are Deloitte’s Top Expectations for Tax Reforms and Simplifications?

As the Union Budget for 2025 approaches, the focus is on easing tax compliance, especially for Non-Resident Indians (NRIs). The government had announced a comprehensive review of the Income-tax Act in the last budget (July 2024), with the objective of making the Act more concise and user-friendly. The Finance Minister's goal was to complete this review within six months. In line with this, several new proposals are expected to simplify the tax process for NRIs and enhance the ease of doing business.

Simplifying TDS Compliance for Property Transactions with NRIs
One of the primary concerns for home buyers in India when purchasing property from NRIs is the complex Tax Deducted at Source (TDS) compliance. Currently, when the seller is an NRI, the buyer must withhold 1% of the property value as TDS if the transaction exceeds Rs 50 lakh. This process requires the buyer to obtain a Tax Deduction Account Number (TAN), deposit the tax, and file e-TDS returns.
Experts expect the Budget 2025 to simplify this process by introducing challan-cum-statements similar to those used for resident sellers, eliminating the need for buyers to obtain a TAN. This will make property transactions smoother and more efficient for home buyers dealing with NRI sellers.

Allowing Tax Payments from Overseas Bank Accounts
Another significant expectation for NRIs is the ability to make tax payments from overseas bank accounts. Currently, tax payments in India can only be made through Indian bank accounts, which complicates the process for NRIs who do not maintain an Indian bank account. Allowing tax payments from international bank accounts would significantly ease the burden on NRIs, making compliance more convenient.

E-verification of Tax Returns for NRIs
The process of e-filing tax returns has streamlined tax compliance in India, but the final e-verification step remains challenging for NRIs. Currently, e-verification can only be done via OTP sent to Indian mobile numbers or through other verification methods like digital signature certificates. In Budget 2025, there are expectations that the government will extend e-verification to foreign mobile numbers or offer two-factor authentication for NRIs. This would reduce administrative hassle, as NRIs would not have to rely on Indian mobile numbers or physical submission of documents.

Tax Refunds to Overseas Bank Accounts
Another key issue for NRIs is the difficulty in receiving tax refunds if they have closed their Indian bank accounts. The current system requires refunds to be credited to pre-validated Indian bank accounts, which can create complications for NRIs who may no longer have access to such accounts. Experts are hopeful that the upcoming budget will allow refunds to be credited to overseas bank accounts, providing greater convenience to NRIs who may have closed their Indian accounts after leaving the country.

Ease of Tax Compliance for NRIs
The proposed changes are expected to reduce the administrative burden on NRIs, providing them with greater convenience in their tax filings and payments. These measures align with the government’s broader goal of creating a simplified and transparent tax regime, while also boosting India’s appeal as a destination for investment and business.