Lok Sabha MP from Thiruvananthapuram Shashi Tharoor has urged Prime Minister Manmohan Singh to put on hold the service tax on remittances by non-resident Indians (NRIs).
In his letter to the prime minister Wednesday, Tharoor pointed out that the decision to impose 12.36 per cent service tax on remittances to India by NRIs with effect from July 1 has generated tremendous resentment across Kerala.
“The imposition of the service tax will adversely affect millions of Keralities, especially those working in low-paid jobs in the Gulf region. This tax of Rs.1,236 for every Rs.10,000 sent home will be an unbearable burden on these ordinary people… and their dependent families at home,” he said.
He called for keeping the decision in abeyance pending a more detailed examination of the “adverse implications” of the move.
Tharoor argued that this was a short-sighted measure which risked diverting remittances to hawala channels and tempting otherwise law-abiding citizens to indulge in undesirable malpractices.
“At a time when the country needs to attract inward remittances and investment, any measure which discourages these should not be contemplated,” he said in the letter.
According to the latest study by the Centre for Development Studies, the total remittances in Kerala in 2011 was estimated at Rs.49,695 crore compared to Rs.43,288 crore in 2008.
The study also revealed that the number of Kerala emigrants living abroad in 2011 was estimated at 2.28 million, up from 2.19 million in 2008.
Whether any bank in India is collecting service charges for receiving remittance from abroad to its NRI account holder? The impact of point of taxation rules, 2012 with respect to the account as including NRI accounts need careful interpretation. If A send money home through SBI’s branch abroad to another account holder in India, A will be receiving service abroad for a fee collected by SBI abroad. SO, it appears the service is received by a person outside the taxable territory as per place of provision of services Rules, 2012 and outside the purview of Finance Act, 1994 from 1.7.2012.If any Bank collect any service charge on such transaction in India, then service tax @12.36 is payable on the service charge so collected.
G.JAYAPRAKASH
What a fool Mr.Tharoor is making of himself. From where did he gat the figure of Rs.1236/- for every Rs.10000/- remittance. You mean banks will charge 100 percent fees for remittance and then pay another 1236 to the government. Crazy man. the baks charge around 0.5 percent fees which would be around rs.300 to 500 per rs.10000/- so the tax will be around rs.60/- per rs.10000/- remittance.
what this rumour has done is that remittances stopped on Friday and Havala transactions started and lot of black money gotconverted to USD and ploughed back into the stock market as FII and FDI through pronotes, pay notes etc. The market index rose by some percentage. There was no demand for the offical USD through the banks, hence the rupee became stronger and usd dropped from Rs.57/USD to Rs. 55.6/USD.
the government will clain that the economy is now on the way to recovery. The political parties are now flushed with funds. the market is getting manipulated and the common man can now go on indifinite satyagraha till he dies of his own accord. the policewill say it is not suicide, but natural death due to lack of adequate nutrition. GOOD GOING MANMOHAM!!
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