India’s tax framework deters NRI wealth, preventing the country from tapping into its global diaspora’s potential for economic growth
India boasts one of the largest and most influential diasporas globally, with over 35 million people of Indian origin living abroad. Among this group are numerous High-Net-Worth Individuals (HNIs) who have amassed wealth through business, investments, and professional success. However, many of these individuals would consider returning to India if not for the country’s unfavourable tax policies, reported financialexpress.com.
India’s Tax Framework Prevents Economic Growth from NRI Wealth.
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India’s tax laws, particularly those concerning returning NRIs, are harsh. Upon their return, NRIs are subject to taxation on their entire global income, including wealth earned abroad
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This excessive taxation often discourages wealthy NRIs, entrepreneurs, and investors from returning to India, keeping their wealth, investments, and spending outside the country
Their reluctance to return deprives India of crucial economic benefits such as high-value consumption, philanthropy, and investments in sectors like healthcare, education, luxury goods, real estate, and automobiles.
A simple policy shift exempting foreign income and investments from taxation could stimulate billions in investment, strengthen foreign exchange reserves, and accelerate India’s GDP growth.
A Shift in Policy Could Unlock Billions and Boost India’s Economy
Adopting a pro-NRI tax framework, exempting foreign-sourced income from taxation while taxing only Indian-sourced income, would benefit India significantly. Such a policy would not only encourage HNIs to relocate but also unlock vast economic potential by boosting investments and high-value consumption. If India embraces this change, it could become a global wealth hub, driving innovation and social progress.
India’s Potential as a Wealth Hub Needs Policy Reform to Be Realized
Without action, India risks losing its own talent and wealth to countries with more favorable tax frameworks. A simple tax reform would make India more appealing to returning NRIs, creating new businesses and enhancing its global appeal as a destination for wealth and talent.
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