NRIs see a boost in asset buying

Businesses and NRIs in the UAE are all set for a transitional phase from now till first-half of 2018 with both India and the UAE embracing bold tax reforms — the much-awaited Goods and Services Tax (GST) to be applicable on July 1 — to be unveiled on June 30 midnight and the Value Added Tax on January 1, 2018, in the UAE.

The GST is proposed to be a comprehensive indirect tax levy on manufacture, sale and consumption of goods as well as services at the national level. It will replace all indirect taxes levied on goods and services by the Indian Central and state governments. The big corporate houses have hailed the government’s decision to unify tax structure and have given its a thumbs-up.

Among the key developments expected are a spurt in buying of real estate and gold in India, and a boost in foreign direct investments due to transparency.

Dr Azad Moopen, founder chairman and managing director of Aster DM Healthcare, said: “The rolling out of GST on July 1 is a major landmark for the Indian economy. It will bring down barriers between the 29 states in India and change the way business transactions are carried out in the country. The direct effect of GST on NRIs is yet to be fully understood.”

The simplification of the tax regime is the most positive aspect of the GST and will improve confidence in the NRI market

The salient areas where there could be implications are that service charges for remittances may go up to 27 per cent from present 12 per cent. This will have an impact on the commission charged by agents. One of the important areas where there could be a major benefit is the purchase of houses. Due to the uniform service charge of 12 per cent proposed for real estate, there will be more transparency as well as reduction in cost of houses. As a major part of NRI remittances are used for buying homes this will have very positive impact. There will be more of FDI to India which is likely to increase business prospects. The predicted growth in GDP is two to three per cent, which will have an impact on all investment, added Moopen.

Yusuffali MA, chairman of Lulu Group, said: “As a businessman and an investor I am indeed delighted to note the new reforms will be rolled out from July 1, easing the tax structure. However, I certainly see compliance as a challenge that over a period will ease as the government has assured ample support in terms of time and services to adapt to the new tax regime.

Anis Sajan, managing director, Danube, said the bold step of GST will definitely boost foreign direct investments and benefit the NRI community in terms of investing in the real estate sector. The simplification of the tax regime is the most positive aspect of the GST and will improve confidence in the NRI market.

Y. Sudhir Kumar Shetty, president of UAE Exchange, however opines that though at an individual level NRIs will not be affected by GST as such, their families, living in India, will feel an impact. But the bigger picture does look brighter. The launch of GST is a significant step in reforming the existing indirect tax structure in India. Amalgamation of several central and state taxes will alleviate cascading or double taxation, paving way for seamless flow of goods and services across the country. This is also likely to benefit the consumer, who will be levied lesser tax in certain sectors.

“The GST will positively spur the

The launch of GST is a significant step in reforming the existing indirect tax structure in India

manufacturing of indigenous goods thus stimulating India’s ambitious ‘Make in India’ initiative. Services will be dearer and consumables will cost lesser. On a macro-level, a unified tax structure will reduce the cost of tax compliance and complex processes thereby attracting more foreign direct investments, spiking the GDP and strengthening the Indian economy in the long run,” added Shetty.

Paras Shahdadpuri, chairman of Nikai Group of Companies, said: “NRI’s are likely to benefit by way of lower property prices due to GST implementation. A builder who currently pays excess duty, VAT, entry taxes such as octroi, transportation, etc at different rates will now pay a simplified GST at a relatively lower rate, which is likely to bring down the cost of construction. Such a reduction in the cost to the builder will be passed on to the ultimate buyer due to lower input taxes.”

UAE-headquartered diversified conglomerate, KEF Holdings, which has offsite manufacturing operations in India, has also welcomed the new GST roll-out.

Faizal Kottikollon, chairman and founder, KEF Holdings, said: “The GST will streamline the processes in the supply chain significantly, by doing away with the duplication of taxes. From an operational standpoint, our offsite manufacturing business will stand to gain from the expected reductions — a benefit we expect to share with our various stakeholders, especially the customer. We think this is a strong and progressive policy introduced by the Indian government that will benefit businesses across sectors and help boost the Indian economy.”

K.V. Shamsudheen, director, Barjeel Geojit Securities, thinks major asset classes like real estate and gold will come under a uniform tax structure in all states and it will make the business transparent. “For NonResident Indians there will not be much direct impact, still for NRIs India’s complex tax system is a nightmare, GST implementation will give a relief to them.” The implementation of GST will end the complex, multiple-layer corrupt

GST will end the complex, multiple-layer corrupt years’ old tax system. It will be paradigm shift to completely online system

years’ old tax system. It will be paradigm shift from paper-based system to completely online system and makes tax collection easier. All state governments and central governments will get more tax revenue and it will lead to increase in the GDP.”

Echoing positive sentiment was Mansi Saxena, marketing director, SPF, who sees implementation of GST as likely to have a positive impact across many different industries, such as real estate, logistics, warehousing, automobiles, etc, which will make India more attractive as a foreign investment destination. This multiplier effect will further boost NRI investment in the country, she said. — sandhya@khaleejtimes.com