Tax non-resident Goans
Earlier this month, at the India Mobile Congress held in New Delhi, the CEO of a telecom operator made a significant statement that government levies on the telecom industry amounted to 58%, the highest in the world. My God ! When the government takes 58%, one can imagine the woes of the industry continually working with its back to the wall and expected to deliver best-in-class service with only a 42% margin to play with. The same story goes for gasoline, with government taxes amounting to around 50%. In short, when an Indian recharges his mobile by Rs 100, Rs 58 has already gone to the government and for a liter of petrol almost Rs 50 is the government’s share.
Meanwhile, in distant Melbourne last week, people of Indian descent were seen dancing in the streets long before the Virat Kholi magic happened on match day. Did the Indians have a certain premonitory power to know in advance the result and therefore the celebration? Or had they gone mad because Team India was visiting them after a long stay in their country of residence. Or maybe, just maybe, they were celebrating the fall of the Indian Rupee which has unfortunately been falling since the start of 2022 from below Rs 74 to above Rs 82 and changing. After all, a fall in the value of the Indian rupee primarily benefits NRIs as it increases their purchasing power by buying Indian assets. Not that the ticket for the match in Melbourne had to be paid for in Indian rupees, but it is quite possible that these NRIs have made some earnings on their recent purchases in India and have spent those earnings to come and watch the match almost for free, hence the rejoicings.
On the other hand, Indians who had planned to travel to Australia for the Cricket World Cup and had delayed buying their tickets and accommodation were shocked as they were told to pay more as the Indian rupee had slipped. Ok, the Indian rupee hasn’t fallen much against the Australian dollar, but the fact is that the Indian rupee has been in perpetual decline for ages and has no intention of reversing and becoming more strong. Whenever the government feels it needs to stop the rupiah’s fall, it approaches the NRIs with resurgent dollar-denominated bond issues with attractive interest rates. But here’s the difference, bond issues are not comparable to the tax paid by resident Indians. The money from the bond issues has to be returned, when the term is over, while the tax paid goes into government coffers and resident Indians these days can’t even question the government about what they have intend to do with our taxes.
The author is not suggesting that NRIs should be taxed because that might practically not be possible due to compliance issues and also because India will always have this eternal need for foreign currency, then don’t forget to approach non-residents to bail the country out of harm’s way. So far we have had four bond issues that have sailed and in all four cases bonds have been issued to stem the fall of the rupee. But that’s about all, that’s all the contribution that the NRIs have made to the country by filling the Indian coffers with foreign currencies that the government manages badly anyway. Comparatively, resident Indians have to pay taxes on their personal income as well as expenses (GST) and also have to deal with the music due to the slippery rupee, a triple whammy if you can call it. Therefore, it is necessary to understand that Indians who choose to live in India cannot be at a disadvantage compared to Indians who choose to reside abroad. Encouragement of the Indian team by the NRIs would make more sense if everyone, resident or non-resident, contributed equally to the exact amount of taxes in the growth of India’s infrastructure.
Again, taxing NRIs is impractical in terms of compliance or the double taxation problem that will arise, but this article is written for non-resident Indians to recognize the plight of resident Indians. So here is a solution to make a fair deal between residents and non-residents, it’s better India abolishes personal income tax for residents and suddenly everything will seem fair. Let the GST stay because it is a tax on your consumption, provided it is simplified with a maximum of two GST brackets. The GST council should be dismantled because its existence will make the GST more and more complicated. These guys from the GST council are really funny; they have even made eating pizza in India a complex affair as the pizza crust attracts a different GST rate and the toppings a higher rate.
The message they are trying to send is probably to eat more crust like chapatti without jam and forget the toppings. In fact, these GST council meetings are held in star hotels and the members travel from different parts of India. They must therefore be perceived as doing something. So they offer strange and complicated tariffs. If there’s only one or two GST rates, these guys won’t have anything to discuss and their tour won’t make sense.
A quick note to non resident Goans, the title of this article was just to get your attention, taxing NRIs is just not practical but here is what you can do, at least start lobbying governments, the Center and the state to relieve resident Indians. Lobbying from Goa is difficult as there is no opposition taking over the cause. Moreover, most Goans treat politicians as handymen elected to do their personal work. The collective demand for the abolition of personal income tax seems far-fetched. While NRIs or people of Indian descent will change governments in their country of residence if spending gets out of hand, in Goa we mostly live with it as most Goans once took personal favors from politicians and therefore remain in mute mode. Also, the tax is very subtly masked by the government which most Goans find difficult to decipher. Even talking on the phone is taxed at 58% for resident Indians and most don’t know it. Hope you get the drift.
(The author is a business consultant)