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August - September 2004
GOPIO Urges Elimination of Tax on Returning NRIs
Government of India imposes income tax on NRIs on their global income (not earned in India) after 2 years of residency in India. Earlier the Government had a blanket no-tax policy of 9 years for returning NRIs. However, Minister Jaswant Singh changed it to 2 years. GOPIO protested at that time, calling it unfair and counterproductive. The new policy served as a deterrent to many NRIs planning return to India for retirement.
The tax policy took a major bite of their income on which they had already paid taxes in the countries they had earned. It was also a major source of income loss to those who had already settled in India for retirement or for those who had no alternative but to go back to India even before retirement. NRIs from the United States and Europe with small amount of retirement (global) income equivalent to U.S. $15,000 with zero tax in the U.S. have to pay heavy tax in India under the current fiscal policy when that money is converted into rupees. Such a double taxation is most unfair to NRIs returning to their motherland for their final years.
At the GOPIO Convention 2004 held in New Delhi early this year, GOPIO had passed and submitted the following resolution to Government of India: WHEREAS GOPIO urges that the NOR global tax (under section-6-6) exemption of two years be restored back to the original nine years, that was there before the change brought on by the Finance Bill 2003. Even earlier, Finance Minister had withdrawn a very similar change in 1998.
Whereas GOPIO continues to feel Government is justified taxing any and all incomes generated within India by returning NRIs/PIOs, the tax exemption on global income should be reverted back to the nine year period. This would encourage greater cooperation of 22 million NRIs/PIOs, who form a considerable national resource of global network for India's growth and development.
The Supreme Court of India, in June 2004 ruled against the current global tax regime on a returning NRI from Malaysia, due to the Dual Tax Treaty. Earlier even the Chennai Income Tax Tribunal as well as the Chennai High Court had ruled the same as the Supreme Court.
GOPIO has sent a position paper, "Eliminating the Global Tax on Returning NRIs" to the government for more details, requesting elimination of the tax. A letter to this effect was send on behalf of GOPIO by its President Inder Singh and Chairman Dr. Thomas Abraham to PM Manmohan Singh, FM P. Chitabaram and NRI Minister Jagdish Tytler. GOPIO is a global, non-partisan, not-for-profit, secular organization promoting the well being of the NRIs/PIOs, enhancing cooperation and communication between Indians living in different countries.
In 1989, for the first time in the history of overseas Indians, an attempt was made to bring the global Indian community together on one platform. During the week-long convention in New York, representatives of twenty-six countries including some ministers and PIO heads of state, took active part in the deliberations. At the conclusion of the convention, a new organization, the Global Organization of People of Indian Origin (GOPIO) was established to network the global Indian community.
The people of Indian Origin living outside India have numerous achievements, individually and collectively. "We in GOPIO believe that NRIs/PIOs have contributed significantly to the countries of their adoption and have added a special glitter to the resurgence of India," said Dr. Thomas Abraham, Chairman of GOPIO. "We also believe that the destiny of India's Diaspora, in many ways, is intertwined inextricably with the fortunes of India and the NRIs/PIOs are bound to India by the umbilical cord of history, culture, tradition, social and economic ties," Dr. Abraham added. Many NRIs/PIOs worldwide are engaged with the homeland more deeply than ever before.
"We urge government of India to rescind this tax in the forthcoming budget and encourage NRIs who want to spend their final years closer to their roots," said GOPIO President Inder Singh.
GOPIO can be contacted as follows: Inder Singh, E-mail: firstname.lastname@example.org Tel: (818) 708-3885 or Dr. Thomas Abraham, E-mail: email@example.com, Tel: 203-329-8010.