NRI issues: a more inclusive digital payment infrastructure will facilitate cross-border transactions
Question – As controversies rage over the benefits and dangers of cryptocurrencies, central banks are strengthening basic infrastructure and the technologies used. Does the central bank’s digital currency (CBDC) have a role to play in the new ecosystem?
A – In traditional payment systems, banks store customer information in dedicated databases. The central bank’s digital currency (CBDC) aims to bring the entire payment structure together under one roof. CBDCs are based on the inherent blockchain framework. This will make it easier for governments to design complex monetary policies and create stimulus packages. CBDCs are not anti-crypto because they use the same global transactional infrastructure. CBDCs will become important in making payments simpler and faster. This will not affect standard crypto players with their own crypto currencies. Therefore, it is expected that there will be a confluence between CBDCs and cryptocurrencies. The more inclusive digital payment infrastructure will facilitate cross-border transactions and faster remittances. It won’t be out of place to mention that the International Monetary Fund recently suggested coordinated action among nations to put in place global standards for the regulation of cryptocurrencies in both emerging and developed countries.
Q – While working in Dubai, I am also assigned to a managerial position in an Indian associated company. I receive a salary from this Indian company and I am entitled to all the benefits including the company’s provident plan. I have been informed that an amendment has been proposed to tax a portion of the interest received on contingency fund balances. Can you please offer information on this?
A – New tax rules have been notified according to which provident accounts will be classified into two separate funds, one taxable and the other non-taxable. A new 9-D rule was introduced which would apply when the amount of interest received on the contingency fund balance exceeds Rs 250,000 each year. This interest will be taxable. In addition, if the amount paid by the employer / company into a recognized provident fund or approved retirement pension fund exceeds Rs 750,000 in a financial year, that excess amount would be taxable as indirect benefit. The tax will be levied at the normal rates applicable to all salary and indirect benefits. In short, the indirect value on which tax would have to be paid would be limited to the amount above Rs 750,000 per year, while any amount below that figure would be exempt from tax.
Q. – My daughter, who recently divorced, lives in India. She would like to have a child by surrogacy. There are conflicting reports on legislation, which has been introduced in India, in this regard. Will this legislation affect a person’s right to parenthood through surrogacy?
THE MINISTER – Your information is correct because a bill on surrogacy (regulation) has now been adopted by the upper house of parliament. Under the new legislation, which will be enacted shortly, single men and women are not allowed to become parents through surrogacy. It is only allowed for married couples. Resident couples are not allowed to have a child through surrogacy. Previously, it was expected that the surrogate mother would be a close relative of the future parents. This clause has now been dropped. However, for surrogate mothers, certain restrictions have been imposed. There is a limit under the new law that a woman cannot be a surrogate more than once in her life. In addition, the woman must be between 25 and 35 years old. A limit has also been set on the compensation that can be paid to a surrogate mother. The new legislation was therefore not well received due to several restrictive conditions that were imposed.
– HP Ranina is a practicing lawyer specializing in the Tax Laws and Foreign Exchange Management of India
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