NRIs can benefit from STT deduction. the Budget announced a 20% cut in STT to 0.01%.
I understand that the choices before Finance Minister Pranab Mukherjee were limited that if he tried to offer immediate gratification to investors by announcing deep and bold tax cuts, he might end up putting India's longer-term prospects at risk.
However, as an NRI having investments in India, I am affected by the laws of taxation decided in the Budget. For example, currently, long-term gains in Debt Mutual Funds for NRIs attract a TDS of 20% plus surcharge. Now if he falls in lower taxation slab he would have to claim refund by filing returns. An ease in the process could rope in more investments and an NRI would be more inclined to invest in India.
Foreign investor expectations
Currently, foreign individuals are allowed to invest in Indian corporate bonds only as a sub-account of a foreign institutional investor (FII). The FIIs, in turn, needs to go to Sebi and apply on their behalf. Direct investment will not only make the process simpler, but also less expensive.