Economic offenders such as Vijay Mallya, Nirav Modi and Mehul Choksi, caused huge loss to the public exchequer and banks.
NEW DELHI: The going is set to get tough for High Net worth Individuals (HNIs) who change their citizenship to evade tax and legal processes and yet reap economic benefits extended to their businesses in India, as the government is mulling changing taxation rules for them. Last year, about 7,000 millionaires shifted their residence outside India, or changed their citizenship, including economic offenders such as Vijay Mallya, Nirav Modi and Mehul Choksi, causing huge loss to the public exchequer and banks.
After the Nirav Modi case, the Central Board of Direct Taxes (CBDT) set up a five-member working group to examine the exodus and look into the taxation aspects of such individuals.“In last there is a rise in the number of cases where people have changed their citizenship but continue to do business here, parking their assets while evading personal taxation. In many cases, there are mixed citizenship patterns, where a family has multiple citizenships. What is tricky is that while they are able to create wealth here, they are able to escape taxation. This has to be changed,” a finance ministry official told The New Indian Express.
The committee has already prepared its preliminary report, with key recommendations.
“There is need to change the taxation for such individuals. You cannot continue doing business and avoid paying taxes, which is a clear case of tax evasion and loss for exchequer. We will soon review the whole issue of wealth tax,” another official from the finance ministry, who is aware of the committee’s findings, told The New Indian Express.
This means such individuals will have to pay higher tax on property and assets, the officials suggested.
However, the committee has also acknowledged that introduction of high wealth tax has forced many people to leave the country.The committee, meanwhile, is also reviewing the list of such defaulters and possible defaulters who have changed their citizenship or their family members have changed their citizenship or applied for another citizenship.
“We are keeping an eye on such individuals, especially businesses, and are tracking their changing shareholding patterns, asset transfers and major financial transactions,” the official said.Tax officials and investigative agencies are already struggling to bring back culprits and are pursuing extradition cases in foreign courts.
