New Delhi: The
proposed changes in the new direct tax code, which makes NRIs
liable to pay tax if they stay in India for over 60 days a year,
has led to some distress among the Indian diaspora in the Gulf
region as they tend to spend a longer time in India due to their
different socio-economic background, prominent NRIs say.
"NRIs in the Gulf cannot be considered at par with the NRIs in the
rich Western countries. They should be given differential tax
treatment," Ram Buxani, president of Dubai-based Cosmos-ITL Group,
told IANS in an interview.
The new direct tax code (DTC) proposes to make non-resident
Indians (NRIs) liable to pay tax if they reside in India for more
than 60 days in a particular year, down from the current provision
of 182 days in the existing Income Tax Act.
"NRIs who are in the Gulf tend to visit India for a longer period.
They do it for various purposes like long-term medical treatment,
children's marriages and education," said Buxani, adding the
proposed tax regulation had created unrest among Indians in the
Gulf region as a majority of them visit their homeland for more
than 60 days in a year.
Buxani, founder of the erstwhile Overseas Indians Economic Forum
that was later merged with Indian Business and Professional
Council, said the Gulf region should be given differential
treatment under the new direct tax regulation in line with the
Customs Act that gives special treatment to neighbouring countries
like Nepal and Bhutan.
"Our demand is that the current provision of 182 days should stay.
If it is brought down to 60 days, the Gulf region should be
exempted," said Buxani.
He said prominent NRIs from the Gulf region were lobbying against
proposed changes and had already raised their concern with the
The Direct Tax Code (DTC) Bill was tabled in parliament in the
monsoon session last year. The new rule is aimed to replace the
archaic Income Tax Act from April 1, 2012.
According to the draft bill, NRIs become Indian residents for the
purpose of taxation if he/she stays in India for 60 days or more
in a financial year and also stayed for 365 days or more in the
preceding four financial years.
Finance Minister Pranab Mukherjee said the government was aware of
the concerns of the Indian diaspora and had not yet taken any
final decision on the issue.
"It is still in the formulation stage - under scrutiny of relevant
parliamentary committees, no final decision is taken yet,"
Mukherjee said at the Indian diaspora meet here.
M.A. Yusuffali, managing director of EMKE Group that runs LuLu
hypermarket chain in the Gulf region, said the proposed regulation
would hurt low-paid workers.
"Many people take two-three months' long vacation after working
for two-three years. The new law will be a big problem for them,"
said Yusuffali, who is also a member of the prime minister's
global advisory council.
Yusuffali pointed out that the over five million NRIs in the Gulf
countries are a very important source of foreign remittance for
India and they should be given fair treatment.
Non-resident Indians in the Gulf countries contribute nearly
one-third of foreign remittance flow to India. According to the
Reserve Bank of India (RBI) data, India received $55 billion
remittance during the last fiscal, which constitutes nearly four
percent of the country's gross domestic product (GDP).
(Gyanendra Kumar Keshri can be reached at email@example.com)