Pre Budget Views: NRI Investors and Steel Sector

As the Union Budget Announcement draws closer, more and more India Inc. leaders in the NRI Investments space and Steel Sector space, shared their pre-budget views with Team Estrade.

More pre Union Budget views can be read here

Mudra’s Investor Awareness & Suggestion Program

A part of Mudra’s Investor Awareness & Suggestion Program, this interactive survey collected a comprehensive list of what NRIs expect from the upcoming Indian Budget. The respondents were individual Non-Resident Indians from USA/Canada, Africa, Europe, Asia Pacific, Australia, Middle East, and China.

“Every year, the finance ministry works on the Union Budget and solicits views and comments from business and taxpayers. This time, we decided to reach out to the NRI population in about 15 nations,” Nishant Kohli, Founder, Director and Business Head-Wealth, Mudra Portfolio, said and added, “Normally, a survey consists of a series of questions, but this often excludes the originality/suggestion component. So, we approached NRIs with only one question and asked them to indicate what they would want to see included in the budget, which would give room for them to express the problems they were experiencing and the solutions they desired. And the responses we received were quite overwhelming.”

Most of the respondents of the survey are Mudra’s clients who are in the 35-plus age group. They are qualified professionals or middle-to-senior level executives. About 88% of respondents have invested in real estate, 72% in mutual funds, 15% in direct stocks, 100% in NRE/NRO fixed deposits, 15% in FCNR, and 6% in other products such as PE, PMS, VC, and so on.

“We received several excellent recommendations, and the response was positive. The results should not be interpreted from the perspective of the percentage of respondents who had the same opinion, but rather from the angle of quality and distinctive recommendations offered by the respondents, as the survey was not based on predetermined questions,” said Nishant Kohli.

Based on similarity and topic lines, the responses fall under the following four broad categories:

Investment-related Category (MF, Stocks, etc.)

The survey revealed that 85% of respondents who have invested believe that long-term capital gains on MF/stocks should not be taxed. However, a majority of respondents stated that if taxes are still levied, assets held for more than three years should be exempted because they bore the weight of currency depreciation and conversion.

Also as the TDS on short term capital gains in the case of debt-related investments account for a sizable portion of the profit and necessitates NRIs to wait till return filing to claim the same, about 35% of the respondents wanted that it be reduced.

Another unique recommendation given by a few responders was to lower the 20% flat tax rate on dividends. As it impacts total post tax Return on the investment.

Under Real Estate category

TDS was considered as a big dampener for NRIs while selling a property. About 92% of respondents stated that the 20%-23% TDS on property sales, that too based on sale value rather than capital gain, should be decreased. Because obtaining the Low TDS certificate from the IT Department takes little time and effort, and purchasers rarely wait that long.

Though Real Estate is the most preferred investment product for NRIs, encashing the gains from the RE investment, on the other hand, is the most time-consuming and difficult process for the NRI.

A few persons suggested that, at the very least, a CA certificate verifying the Capital Gain be obtained and subtracted, preventing TDS from being deducted on the overall selling amount.

One key proposal or concern that deserves consideration is the TDS on rentals, which was raised by a few NRIs who had rented out their home. TDS @ 30% is deducted by tenants, which leads to low cash in hand and most tenants don’t want to deal with the trouble of making TDS payments on a regular basis – as a result it becomes difficult for NRIs to find tenants for their properties.

Fixed deposits & FCNR category

According to 70% of respondents, NRE FDs with terms of less than a year should be introduced, or they should receive interest if their terms are broken early.

When it comes to tax compliance and filing, most respondents to the interactive survey expressed their gratitude to the government for making tax filing so simple thanks to the online IT site compared to past times. However:

• 90% of the participants want that the intimation of various communications from the IT department should also be sent on the international contact number.
• Regarding tax notifications, NRIs want more time to respond to and act on enquiries. They find it difficult to supply data while they are abroad, as NRI must be physically present in India to collect specific documents – such as those stored in a locker
• Also, suggestions were made to establish local liaison offices in significant foreign cities to promote the resolution of important Tax and compliance issues
• To enhance ease of Investing in India, implementation of Online KYC & Demat Account Opening for Indians located overseas will be a highly welcomed step
• An exclusive NRI Helpline Number for Taxation and Compliance can be established

Geographical representation of survey respondents – region wise

About Mudra Portfolio Managers:

Mudra Portfolio Managers is a leading financial service distribution company headquartered in Mumbai. Established in 2012, the company offers assistance to client in getting a comprehensive, financial solutions spread across various investment products and also provides assistance for taxation & tax filing services. These offerings are tailor-made to client needs and facilitate them in achieving their financial objectives. The services are primarily focused on high-net-worth individuals and NRIs. For more information, visit: https://www.mudraportfoliomanagers.com/

Steel Sector Views – Shyam Metalics

Brij Bhushan, Vice Chairman and Managing Director – Shyam Metalics Ltd, said,“We hope for an increased allocation for products from the steel sector to be covered under the PLI Scheme giving the industry a much-needed boost. We also hope there is an increased focus by the govt. to scale up the infrastructure sector in the country which will have a positive domino effect for the steel sector. A good budget for National Highways will also translate into a positive for us which will further propel the growth of the sector. The industry is already reeling under a lot of pressure due to the raw material price hike, measures stated above will only help the industry look forward to a healthy growth trajectory for both the industry and the economy. We expect the government to increase import duties on major metals to keep the imports in check.”

About Shyam Metalics:

Shyam Metalics is a leading and fastest-growing integrated metal-producing company based in India primarily in the steel Industry in West Bengal and Odisha with a focus on Long Steel Products and Ferro Alloys. The company got listed itself on the exchanges in 2021 and possesses a market capitalization of Rs 7,684 CR. Spearheaded by Brij Bhushan Agarwal, Vice Chairman and Managing Director, the company strives to deliver unparalleled quality through their customized value-added solutions to meet business requirements.  Headquartered in Kolkata, West Bengal, the company is amongst the largest producers of ferro alloys in terms of installed capacity in India (Source: CRISIL Report). The company has the ability to sell intermediate and final products across the steel value chain. Shyam Metalics is one of the leading players in terms of pellet capacity and the largest coal fired player in the sponge iron industry in terms of sponge iron capacity in India.

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Pre Budget Views: NRI Investors and Steel Sector