Favorable tax policies could unlock billions in investments and spending
India boasts a vast and influential diaspora of over 35 million people worldwide, including a significant number of High-Net-Worth Individuals (HNIs). These individuals, having accumulated wealth through business and investments abroad, could play a crucial role in India’s economic growth if encouraged to return, reported onmanorama.com.
Current tax policies discourage NRI repatriation
Many wealthy NRIs hesitate to return to India due to its stringent tax policies. Under current laws, returning NRIs become liable for taxation on their entire global income, including wealth amassed abroad. This serves as a deterrent, forcing entrepreneurs and investors to remain overseas despite their inclination to contribute to India’s economy.
As a result, India loses out on billions in potential investments, real estate purchases, startup funding, and philanthropy. If these HNIs relocated, they would boost consumption in key sectors such as healthcare, luxury goods, education, and infrastructure. However, excessive taxation and bureaucratic scrutiny keep their wealth and expertise abroad, benefiting foreign economies instead.
A policy shift could transform India’s economic landscape
Introducing a tax exemption on foreign income and investments for returning NRIs—while continuing to tax past and future Indian-sourced income—could bring immense economic benefits. This move would not only strengthen foreign exchange reserves but also accelerate GDP growth and increase tax revenues without any downside.
Encouraging NRIs to return is about more than taxation—it is about unlocking investment, innovation, and creating a high-value consumer base. By reforming tax policies, India could position itself as a global wealth hub, attracting its own successful entrepreneurs and investors back home.
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