Non-Resident Indians (NRIs) in the Gulf Cooperation Council (GCC) nations have urged Finance Minister Nirmala Sitharaman to withdraw the proposal to reduce to 120 days from the existing 180 days a year for taxing expatriates for staying in the country.
The new proposal is that anyone who stays in India for 120 days or more in a year will now be deemed as a resident liable to pay tax. This has been aimed at NRIs who evade tax by exploiting the residency norms.
However, many feel that the new policy of the BJP-led government at the Centre will have an adverse impact on investments. “If the government insists with the 120d-ay norm, NRIs will hesitate to start big investments in India,” K.V. Shamsudheen. chairman, UAE-based Pravasi Bandhu Welfare Trust, said.
He said the government should find better solution to stop people from misusing the current law instead of penalising genuine NRIs. “NRIs have remitted $80 billion in 2018, out of that $35 billion came from Indian diaspora residing in GCC countries,” he said.
In GCC countries, Mr. Shamsudheen said that high net worth NRIs having large business establishments in India, regularly visit the country to manage their establishments. So they have to stay more in India than for 120 days.
Also, NRIs who run business establishments such as grocery, restaurants, maintenance companies with partnership firms would stay at least five-and-half months in a year in India.
Similarly, more than half a million Indians working in oil and gas industry in off shores in various GCC countries have to work 35 days at a stretch and take 28 days leave. In these category, there are highly paid professionals and blue collar workers as well. These people have to stay more than 120 days in a year, Mr. Shamsudheen said.
Besides, Indians residing in GCC countries always fly down to India for medical treatment and to support aged parents. In such situation, they have to stay in India for more than 120 days, he said.
The budgetary objectives to increase the income and spending of the people to boost the economy is a welcome step. But taxing an NRI for staying in India for more than 120 days was fraught with danger, Mr. Shamsudheen said.