Income tax department forms committee to look into tax risk of super-rich leaving India
The income tax department has set up a committee to look into the tax implications of the super-rich leaving the country to settle abroad and also arrive at the country’s stand on such migrations.
ET had reported last month that 23,000 dollar-millionaires have left India since 2004, the highest in percentage terms among all countries. The Central Board of Direct Taxes (CBDT) has set up a five-member working group led by a joint secretary-rank official and four revenue officers to look into the taxation aspects of such high-net worth individuals (HNIs), sources told ET.
Setting up the group, CBDT noted that in recent times, there has been a trend of high net worth individuals migrating from their country of residence to other jurisdictions. It noted such a migration is a “substantial tax risk since they may treat themselves as non-residents for taxation purposes in the first jurisdiction even though they may have strong personal and economic ties with that jurisdiction”.
The group will formulate India’s position for various aspects related to taxation of migrating high net worth individuals and also make recommendations for policy decision with respect to tax risks from such migration.The committee is also expected to keep in mind the recent cases of rich offenders such as jeweller Nirav Modi and his uncle, Gitanjali Gems promoter Mehul Choksi, escaping the country. Earlier, liquor baron Vijay Mallya fled the country following collapse of the Kingfisher Airlines.
In 2017 alone, 7,000 millionaires left India, taking India to the top of the exodus charts, according to data compiled by the team headed by Ruchir Sharma, head of emerging markets and chief global strategist at Morgan Stanley Investment Management, ET had reported
.The data shows that 2.1% of India’s rich left the country compared with 1.3% for France and 1.1% for China. He presented the data at a media event last week. Raw data for the analysis was provided by NW World, which conducted a survey of 150,000 millionaires. “While some of the millionaires leaving may be desirable given the corruption drive, we have to be careful we do not throw the baby out with the bathwater,” Sharma had told ET.
“Which is collateral damage of the regulatory overkill.” India will also lose the economic benefit of investments and consumption by these super rich.
The Economic Times, New Delhi, 06th April 2018