Amidst the many issues India is currently facing, one serious one has added to the list. According to a report by investment and financial services firm Morgan Stanley, around 23,000 Indian millionaires are now a citizen of some other countries. These wealthy Indians have given Indian citizenship. Also, around 7,000 left the country in 2017 only.
The CBDT Forms A Committee
The CBDT i.e. Central Board of Direct Taxes has formed a 5 member committee to determine the effect this could have on the Indian economy. The exit of high net worth individuals from the Indian tax bracket is an alarming situation.
In an internal memo the CBDT said:
“In recent times, there has been a trend of high net worth individuals migrating to other countries. Such migration is a substantial tax risk since they may treat themselves as non-residents for taxation purposes even though they may have strong personal and economic ties with India.”
Surendra Hiranandani Joins The List
Real Estate tycoon Surendra Hiranandani, co-founder of the Hiranandani Group is the latest to migrate overseas. He is now a citizen of Cyprus which is an island nation in the Eastern Mediterranean. Taxation was not the reason for him for emigrating from India. According to his statement to the Mumbai Mirror, Hiranandani said:
“The primary reason is difficulty in getting work visas on the Indian passport. I have absolutely no issues with tax rates and other such things. My son Harsh continues to be an Indian citizen and he looks after our company’s interests in India”.
Surendra Hiranandani with a net worth of $1.29 billion is among the 100 richest Indians according to Forbes. He and his brother turned their companies into one of the top real-estate companies in India. Also, he joins the list of Indian millionaires ditching Indian citizenship for tax havens in Europe and the Caribbean islands.
India’s Ranking In Ease Of Doing Business
The problem according to Hiranandani is the ease of doing Business. India is ranked at 100 in the World Bank’s ‘Ease of Doing Business’ index which is not a good ranking. On the other hand, Cyprus ranks way ahead at 53. Also, in the construction industry, the World Bank ranks India 181 among 189 countries in terms of ease of doing business.
Moreover, he lamented the state of the construction business in India saying the profit margins are not more than 10 %. Also, developers are forced to borrow money at 12% annual interest. He said:
“If I had a chance to speak with Prime Minister Narendra Modi today, I would urge him to do something about improving the ease of getting various permissions for the real estate sector. Then, of course, there is the major problem of the rate of interest the builders are charged”.
Thus, business in India needs to improve so that people do not run after jobs. Also, becoming a millionaire is not easy but some get lucky. Check out these fortunate people who became millionaires overnight.