High Net Worth Individuals Current Affairs
The Central Board of Direct Taxes (CBDT) has constituted 5-member working group (committee) to examine taxation aspects related to High Net Worth Individuals (HNWIs) who are migrating abroad to other jurisdictions. The Working Group will be headed by Pragya Sahay Saksena, a joint secretary with Foreign Tax & Tax Research Division of CBDT.
The working group will make recommendations for policy decision in respect of tax risks of migrating HNWIs. It has also been empowered to coordinate with various divisions and directorates of CBDT to formulate India’s position for various aspects related to taxation of migrating HNWIs. The CBDT has termed such HNWIs as substantial tax risk as they may treat themselves as non-residents for taxation purposes in India.
In recent times, there have cases of HNWIs migrating from residence of their country to other jurisdictions. Such HNWIs pose substantial tax risk as they treat themselves as non-residents for taxation purposes in first jurisdiction even though have strong personal and economic ties with that jurisdiction.
The Working Group has been constituted for examining the taxation aspects of such HNWIs. Its announcement comes at the time when there are concerns over recent cases of HNWIs such as Vijay Mallya and Nirav Modi fleeing from country amid ongoing investigations against them.
According raw data analysis by Morgan Stanley Investment Management, In 2017 alone, 7,000 millionaires left India without paying taxes. It makes India top of the exodus charts of HNWIs causing huge loss the exchequer. The data shows that 2.1% of India’s rich left country compared with 1.3% for France and 1.1% for China.
Central Board of Direct Taxes (CBDT)
CBDT is nodal policy-making body of the Income Tax (IT) department under Finance Ministry. It is a statutory authority established under The Central Board of Revenue Act, 1963. It is supreme body in India for framing policies related to direct taxes. The composition of CBDT includes Chairman and six members.