Beginning of this month, at the India Mobile Congress held in New Delhi, a CEO of a telecom operator made a significant statement that Government levies on the telecom industry stood at 58%, highest in the world. Gosh! When the government takes 58%, one can imagine the woes of the industry that is continuously working with their backs to the wall and is expected to give best in class service with a margin of just 42% to play with. The same story is about petrol with government taxes standing at around 50%. In short when an Indian recharges his mobile by Rs 100, Rs 58 is already gone to the government and for a litre of petrol almost Rs 50 is the government share.
Meanwhile in far-away Melbourne, last week, persons of Indian origin were seen dancing away on the streets much before the Virat Kholi magic happened on match day. Did Indians have some precognitive power to know the result in advance and hence the celebration? Or were they going bonkers because Team India was visiting them after a long time at their country of residence. Or maybe, just maybe, they were celebrating the fall of the Indian Rupee which is unfortunately on a downhill from the beginning of 2022 from under Rs 74 to above Rs 82 and change. After all, a decrease in the value of the Indian rupee mostly benefits NRIs as it increases their purchasing power in buying Indian assets. Not that the match ticket in Melbourne were to be paid in Indian Rupees, but it is quite possible that these NRI’s made gains on their recent purchases in India and spent those gains to come and watch the game almost free, hence the revelry.
On the flip side, Indians who had planned to visit Australia for the cricket World Cup and had delayed buying their tickets and accommodations were in for a shock because they were told to pay more as the Indian rupee had slid. Okay fine, the Indian rupee has not dropped much against the Australian dollar, but the point is the Indian rupee has been on a perpetual decline since ages and has no plans to reverse and become stronger ever. Whenever the government feels it needs to arrest the fall of the rupee it approaches NRIs with some dollar denominated resurgent bond issues with attractive interest rates. But here is the difference, bond issues is no comparison to tax paid by resident Indians. Bond issues money has to be returned, after the tenure is complete, while tax paid goes into government coffers and Resident Indians these days cannot even question the government, as to what they intend doing with our taxes.
The writer is not suggesting that NRIs should be taxed, because practically it might not be possible due to compliance issues and also because India every few years is always going to have that eternal need of foreign currency and then remember to approach Non Residents to bail the country out of trouble. So far we have had four bond issues which have sailed through and in all four cases bonds were issued to stem the rupee downfall. But that’s about it, that’s all the contribution NRIs have made to the country by filling the Indian coffers with foreign currency which the government mismanages in any case. Comparatively resident Indians have to pay tax on their personal income as well as on their expenditure (GST) and also face the music due to the sliding rupee, a triple whammy if you may call it. Therefore there is a need to understand that Indians choosing to live in India cannot be disadvantaged over Indians that choose to reside abroad. Cheering Team India by NRIs would make more sense if everybody, resident or non-residents equally contributed the exact amount of taxes in the infrastructure growth of India.
Again reiterating, taxing NRIs is not practical in terms of compliance or the problem of dual taxation that will arise but this piece 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, its better India abolishes personal income tax for residents and suddenly everything will appear fair. Let the GST remain because that is tax on your consumption, provided it is made simpler with maximum two GST slabs. The GST council should be dismantled because its existence will make GST more and more complicated. These guys at the GST council are real funny; they have even made Pizza eating in India a complex affair because the crust of the pizza attracts a different GST rate and the toppings a higher rate.
The message they are trying to send probably is eat more of the crust like chapatti without jam and just forget about the toppings. Actually these GST council meetings are held in starred hotels and the members travel from different parts of India, so they have to be seen to be doing something, hence they come up with weird complicated rates. If there is only one or two GST rates these guys will have nothing to discuss and their tour will have no meaning.
A small note to Non Resident Goans, the headline of this piece was just to get your attention, taxing NRIs is just not practical but here is what you can do, at least start lobbying with governments, Centre and State to give relief to resident Indians. Lobbying from Goa is difficult because there is no opposition that will take up the cause. Also most Goans treat politicians as some handyman elected to do their personal work. Collective demand towards abolishing personal income tax looks far-fetched. While NRIs or persons with Indian origin will change governments in their resident countries if expenses go out of control, in Goa we mostly live with it because most Goans have taken personal favours from politicians once upon a time and hence remain in mute mode. Also tax is masked very subtly by government that most Goans find it difficult to decipher. Even talking on phone is taxed 58% for Resident Indians and most are unaware of it. Hope you get the drift.
(The author is a business consultant)
