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Gulf non-resident Indians seek differential tax treatment
January, 12th 2011

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 from that region 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 media. Buxani, like nearly 1600 non-resident Indians (NRIs) and persons of Indian origin ( PIOs )), were here to attend the three-day Pravasi Bharatiya Divas Jan 7-9.

The new direct tax code (DTC) proposes to make 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 Indian government.

M.A. Yusuffali, managing director of EMKE Group that runs the 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," Yusuffali, who is also a member of the prime minister's global advisory council, told IANS.

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.


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