tax and juristication
The Indian government is considering making changes to tax laws that could mean significant losses for its large expatriate community.
Proposed changes to the rules defining 'not ordinarily resident' (NOR) status may mean they are forced to pay far more tax than at present on their return to India.
The Kelkar Committee on tax reform proposed that non-resident Indians pay tax on their global income if they stay in India for more than 182 days in a calendar year. To keep NOR status, expatriates would have to live outside India for nine out of the previous 10 years, entitling them to benefit from NOR tax breaks for the subsequent two years.
This is a big departure from the current rules, which give tax breaks to non-residents for nine years, after living abroad for two continuous years.
Indian expatriates have begun to lobby the government to stop the ruling. Members of the Confederation of Overseas Indians and the India Overseas Trust have signed a memorandum warning the move could discourage Indian's from reinvesting in their homeland, which has been sent to the Indian prime minister Atal Bihari Vajpayee and the finance minister Jaswant Singh.
The Kelkar Committee was set up in September last year to rationalise tax procedures and improve revenue mop up.
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