Put service tax on NRI remittances on hold: Tharoor

Last Updated: Wed, Jun 27, 2012 08:50 hrs

Thiruvananthapuram, June 27 (IANS) 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.

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