NRIs oppose Kelkar's recommendations on NOR status

DUBAI: A Gulf-based organisation of Indians has strongly opposed a proposal by the Kelkar Committee on tax reforms to do away with the Not Ordinarily Resident (NOR) status, saying it will deter NRI investments in India and also persuade them to park their funds abroad.
In a memorandum to be submitted to Finance Minister Jaswant Singh during the ''Pravasi Bharatiya Divas'' to be held in New Delhi to honour prominent NRIs in the second week of this month, the Overseas Indians Economic Forum has appealed to the government to reject the recommendation which it described as a "slap" to the NRI participants at the function.
The proposal has already come under fire in Kerala where Chief Minister A K Antony said that he would urge the Centre to turn down the suggestion which will be detrimental to Kerala''s economy, which is dependent on NRI remittances.
According to the current tax rules, a person who is not a resident of India in nine out of ten years is exempted from income-tax on his global income as well as income from resident foreign currency account for a period of nine years, which the memorandum said was a positive policy and was responsible for the huge success of resurgent India bonds and millenium bonds in attracting substantial foreign currency investment from NRIs.
The memorandum said the removal of the NOR status would force the NRIs not only to keep their funds abroad but also not declare it on their return to India.
"The benefit of remittance of income on non-repatriable investment which NRIs and Overseas Corporate Bodies (OCBs) are currently entitled to will also not be available to them once the NOR status is removed," it said.