The Central Board of Direct Taxes (CBDT) has set up an internal working group to examine the taxation aspects of high net worth individuals (HNWIs).
The group has been set up to ensure that individuals who pose a substantial tax risk pay their dues. The CBDT stated in a letter that in recent times, there has been a trend of HNWIs migrating from their country of residence to other jurisdictions, which poses a huge tax risk, as they may treat themselves as non-residents for taxation purposes even though they may have strong personal and economic ties with India.
• The working group of tax officials will comprise five members including a joint secretary-rank official and four revenue officers.
• It will propose measures on tax risks arising out of such persons and how to deal with them.
• It will also take inputs from field officials before finalising its report.
• The first meeting of the working group will be held on April 6.
Video: Check out the latest current affairs of this week
• Since the past few years, the Union Government has started levying higher taxes on the super rich or those earning above ₹1 crore a year to ensure equitable taxation.
• However, the issue has gained much prominence in recent years with many HNWIs fleeing the country after defaulting on loans and taxes.
• While the Income Tax Department has renegotiated tax treaties with countries to ensure that companies pay their dues in the country of business, individuals including promoters of firms have taken foreign citizenship to claim that they do not need to pay taxes in India.
• Hence, the working group will also look into global tax practices to find a solution to the challenge. It is expected to give its recommendations in 3-4 months.