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Source: Times of India. 30 Sept. 2004. at: http://timesofindia.indiatimes.com/articleshow/msid-869680,curpg-1.cms BY: VINEETA PANDEY TIMES NEWS NETWORK[ THURSDAY, SEPTEMBER 30, 2004 10:46:01 PM ] NEW DELHI: The government has bowed before the clout of the NRI community and has withdrawn remittance tax on their deposits proposed in the Budget following protests by the non-resident community which felt that it would have no choice but to move funds to other tax-free destinations. The tax will now be considered afresh in April 2005, when the next Budget is due. But given the strong reactions of NRIs across the globe, it is doubtful whether the measure will be revived. The move has a political sub-text too as NRIs have been seen to tilt towards the BJP and the Congress would like to correct this inclination. During the NDA regime, former prime minister Atal Bihari Vajpayee's foreign travels would often see him reach out to NRI audiences. Despite their relatively small numbers and limited investments in India, the NRI community commands a disproportionate influence. "The NRIs felt disappointed," said Overseas Indian Affairs minister Jagdish Tytler. He added that the government has decided to hold the plans on tax till 2005 April. It is learnt that the decision was taken keeping in view NRI sentiments as organisations, especially from the Middle East, wrote letters and delivered memorandums to Prime Minister Manmohan Singh, Finance minister P Chidambaram, Foreign Minister Natwar Singh and Tytler urging the government to withdraw the move to tax interest on Non-Resident External (NRE) deposits and the Foreign Currency Non Resident (FCNR). "There was massive furore and lot of protests from NRIs. We received a lot of complaints on that urging the government to withdraw the proposal," an official said. However, it didn't take too much time for the PM and Finance Minister to be convinced that it would adversely effect not only NRI investments but may also prevent them from investing in projects in India. The proposal to withdraw tax exemptions on interest earned from foreign currency accounts of NRIs from September was presented by Chidambaram during the General Budget for 2004-05 which the minister said "had outlived their utility." This would have led the banks to deduct 10 per cent TDS before paying interests on the NRI accounts. =================================================== --- Outgoing mail is certified Virus Free. Checked by AVG anti-virus system (http://www.grisoft.com). Version: 6.0.762 / Virus Database: 510 - Release Date: 13/09/2004
