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June 2012

Info exchange pacts turn troublesome for NRIs — Inbound investment may suffer as foreign taxmen seek info on funds parked by NRIs in India

By Tarunkumar Singhal, Raman Jokhakar, Chartered Accountants
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India’s search for black money overseas is having an unintended consequence, one that could affect one of its stable sources of dollars. Investments by non-resident Indians, or NRIs, and their funds parked in India are coming under the glare of the tax authorities in their home countries.

Indian income-tax authorities are sending financial details of NRIs to their respective countries under the information exchange agreements inked by New Delhi with many countries.

 Indians settled overseas have collectively pumped in nearly INR600 billion in NRI deposits in India in April- February 2011-12 financial year to take advantage of the higher returns available here. Interest rates of these NRI deposits can be as high as 9.5% in some cases, which yields a handsome tax-free package for investors even after adjusting the rupee depreciation.

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