  Let $X$ be a compact connected CR manifold of dimension $2n+1, n \geq 1$. Let
$\widetilde{X}$ be a paracompact CR manifold with a transversal CR
$S^1$-action, such that there is a discrete group $\Gamma$ acting freely on
$\widetilde{X}$ having $X \, = \, \widetilde{X}/\Gamma$. Based on an asymptotic
formula for the Fourier components of the heat kernel with respect to the
$S^1$-action, we establish the Morse inequalities for Fourier components of
reduced $L^2$-Kohn-Rossi cohomology with values in a rigid CR vector bundle
over $\widetilde{X}$. As a corollary, we obtain the Morse inequalities for
Fourier components of Kohn-Rossi cohomology on $X$ which were obtained by
Hsiao-Li by using Szeg\"{o} kernel method.
