Non-Resident Indians in the Gulf have urged Finance Minister Jaswant Singh to retain the present tax benefits for NRIs returning home permanently and not abolish the Not-Ordinarily Resident status now valid for nine years.
The United Arab Emirates-based 'Pravasi Bandhu Welfare Trust' has in a representation, signed by several Gulf NRIs, said they were agitated over recent moves to slash the tax holiday for returning NRIs from the present nine years to two years, K V Shamsudheen, chairman of the trust, said.
"While several policies of the government in recent years has helped lift the economy, there was need for a continuity in policies regarding NRIs and dividend taxes to attract more investment from abroad," Shamsudheen said.
"The total remittance of $10 billion in 2001 by Indians abroad is the second largest source of foreign exchange for India; it is less volatile than the leading source of foreign direct investments. To earn a profit of this magnitude from exports, a number of subsidies are to be given to the exporters," the representation said.
Shamsudheen said the finance ministry had indicated that it will retain the provision in the Finance Bill to tax incomes of foreigners and NRIs after they had resided in India for two years.
According to existing provisions the NRIs returning home are treated as Not Ordinarily Resident (NOR) and were exempted from taxes for nine years.
The Kerala chief minister had also appealed to the Centre to drop the move as it will harm the interests of the state dependant on NRI remittances and investments, he said.