Thiruvananthapuram: The Modi government's recent announcement that the Indian income of NRIs will be taxed may have been a misstep. NRIs are the vital source that sustains Kerala’s economy, and the recent announcement may have further curtailed the saffron party's chances of making headway in the southern state.
Finance Minister Nirmala Sitharaman in her Budget for 2020-21 had proposed taxation of non-resident Indians (NRIs) who do not pay taxes in any foreign country. She later clarified that only the Indian income of NRIs is proposed to be taxed under the new provision.
The proposed tax on NRIs will not apply to bonafide Indians working in tax-free foreign countries and is intended to tax only those seeking to escape tax by exploiting their non-resident status, the government clarified.
Remittance money is a highly emotive issue in Kerala as most families, particularly in Malabar and central Kerala, have one or more members working in the Arabian Gulf, Europe and the United States. The Kerala expatriates keep close bonds with their families back home and there is zero tolerance for anything that affects the welfare of NRKs, the popular term used to identify non-resident Keralites.
Sitharaman's announcement appears to have alienated large sections of the people. Although there is no formal personal income tax in the Gulf countries, the governments there impose heavy levies by way of visa charges and myriads of fees. The budget seems to have overlooked this vital fact.
A day after the presentation of the budget, the Finance Minister clarified that only incomes generated within India by NRIs would be taxed, seeking to pacify the agitated population as most political parties joined the vociferous protest. But, it would seem that the damage had already been done.
There are other sticking points, including the reduction in the number of days an NRI can stay in India without losing the non-resident status.
Some of the most successful businesses in the Gulf are owned by Keralites, who have shown the kind of business acumen their counterparts in their own state were never capable of. But a large number of non-resident Keralites working in the Gulf are low-earning blue-collar workers, who struggle with their inhospitable conditions to save money for their families back home. Their cause evokes sympathy among all shades of opinion.
Already organisations representing NRI interests and their beneficiaries back home have attacked the Modi government for its budget proposals. The Gulf Malayalee Welfare Association pointed out that the squeeze from the Indian government comes at a time when NRIs are struggling to cope with the high cost of living, high education costs and steeply rising airline ticket charges.
They assert that no other budget in history has targeted non-residents as the Modi government has done and called upon the state government and MPs from the state to put pressure for their withdrawal.
Similarly, the Kerala Pradesh Pravasi Congress, an outfit affiliated to the Indian National Congress, has assailed the failure of the Modi government to address the issues of Gulf returnees, such as bank loans for starting new businesses or rehabilitation of those who have lost jobs. Large number of Gulf expatriates are coming back home on a daily basis, creating a sizeable section of frustrated people, with its attached social and cultural fall-out in the state.
