NRIs up in arms against Centre for service tax on remittance services - NRIs said that imposition of service tax would give boost to hawala transactions

Thursday, 30/10/2014

http://epaper.dailypostindia.com/Details.aspx?id=117630&boxid=59253&uid=&dat=2014-10-30

Jalandhar : The recent decision of Prime Minister Narendra Modi led Centre government to implement a hefty service tax on money transactions from abroad has drawn flak from the NRIs in Punjab, especially the NRI rich belt of Doaba.

Across country, 10 per cent of remittances were done through the Forex trade and Punjab alone accounted for 70 per cent money transactions by the NRIs owing to a large number of expatriates abroad.

On Wednesday, a delegation of NRIs from Hoshiarpur, Jalandhar, Nawanshahar, Kapurthala, Ludhiana and Amritsar districts approached NRI Sabha Punjab to urge the Centre government to take back its decision of levying 12.36 per cent service tax on every transaction from abroad. Service tax was also imposed in the year 2012, but it was rolled back following protest of the NRIs.

The NRIs handed over a memorandum to NRI Sabha President Jasvir Singh Gill and said that such a move would ultimately boost ‘Hawala transactions’ in Punjab. “The newly imposed service tax would become a hurdle in the free flow of foreign exchange to the country. This would certainly boost Hawala trade, as NRIs would avoid making any transactions through forex,” he said.

Addressing a press conference, NRI Sabha President Jasvir Singh Gill said that he has written against the implementation of service tax to PM Modi, Union Finance Minister Arun Jaitley, Union External Affairs Minister Sushma Swaraj and Chief Minister Parkash Singh Badal.

“The NRIs want that CM Badal should intervene in this serious matter, as they were already paying tax abroad before sending money to India through forex. The fee was already paid by the NRIs to the money transfer service abroad, but now the receivers would have to pay the fees,” Gill said.

The NRI Sabha president maintained that NRIs keep on sending money back home to their families for different purposes but such a move would burden their families. “There were many NRIs whose children were studying in Punjab and they had to send money through Western Union. At the same time, there were Punjabis who were employed on work permit visas in the Middle East countries and earning a meager amount, but would be forced to pay 12.36 per cent service tax,” he added.

NRI Balraj Singh Chauhan, whose family was settled in Canada and UK said that firstly NRIs would be forced to adopt illegal route to send money and secondly it would add burden on their families too. “We have lodged our protest against the Centre government for levying service tax, which was nothing but an attempt to eat a major share.”

It is pertinent to mention here that international remittances by NRIs and were a consistent contributor to the Forex Reserves of the country. According to the estimates of Ministry of Overseas Indian Affairs, around 61 per cent of the amounts remitted by NRIs were used for family maintenance. Similarly, NRI senders were equally important constituents of the economy, who contributed approximately $73 billion in 2013 to the Forex Reserves of India by sending remittances.