Policy Suggestions - India sign now

Policy REFORMS
Dear Sir or Madam( Mr Ahluwalia/Mr Singh),

My name is Tarana Lalwani. I was born and raised in Mumbai, educated in Kodai Kanal International following which I was in the United States pursuing my Bachelors in Science and MBA from Columbia University. I have worked in New York with Morgan Stanley and Radian Asset Assurance and on my return to India 3 years ago at Webaroo, a start up,a boutique private equity firm and am currently working with a education startup. I write this letter for two reasons. First, to congratulate you on having so successfully steered our country in the last many years - we live to enjoy the benefits brought on by your forward thinking policies. And second, while I do not consider myself an expert in policy matters I feel like I am a representative of people my age and background across India that do not have a forum to express their needs and opinions. I strongly feel it pertinent that our concerns are aired and heard. It is in lieu of this that I take this opportunity to start with my voice.


1. Employment of foreigners

As India comes into this own in a global economy for the first time we are finding people from across the world of Indian and non Indian origin wanting to come to India to work and live. Given this change in circumstances, I feel it is essential that the government review and implement new policies that will protect young, educated, working Indian passport holders like myself.

For example, in the United States one is allowed to work for a maximum of 6 years on an H1 work permit. An H 1 work permit is only granted when a firm can prove that the non US citizen they are hiring has qualifications that cannot be met by a US citizen. Foreign employment is greatly discouraged with the high H1B filing fees and tedious process. The government is now considering levying additional taxes as well. After /Within six years one has to apply for a Green Card through the company one works for, which is a long and difficult process in order to continue working in the United States . A person on a work permit also pays social security and other taxes that he/ she does not receive the benefits of.

In India, however, the situation seems the opposite. The information available is not clear but it seems foreigners can work in India indefinitely, get a work visa very easily and also receive tax breaks in some sectors. In addition, there are many that work here illegally especially in the creative fields i.e. film industry/modeling.

As a result we have a steadily growing number of qualified Indians who are unemployed because foreigners are taking jobs that we Indians could be hired to do. More often than not they get paid more than Indians, adding to unemployment and inflation in the country. Like visa fees, employment visas should be reciprocal with a country. We should look to have more stringent employment visa procedures, penalize companies for hiring foreigners in the form of processing fees/taxes (source of revenue for government), and lastly, charge foreigners higher taxes if not the same as we charged our own citizens .

Essentially penalizing Indians who have chosen to live and contribute to India over their lifetime does not seem fair.

2. Tax Breaks to Foreigners/Foreign companies

While I understand our policies are meant to encourage foreign investment but looking at our tax laws it seems we are doing it at the cost of penalizing us Indians once again. Today foreign companies have India as part of their growth strategies i.e. they need our market as much if not more than we want them. I implore you to revisit our policies to find a solution to the current bi polar situation where foreign companies such as Mauritius shells pay zero percent in taxes and an Indian company/individual pays 30\%. Some suggestions that come to mind such as charging POI/OOC cardholder on global income thus ensuring that people taking the residency are actually willing to contribute to India just like the US greencard holder is obligated to pay taxes irrespective of where they are based geographically (this could be another source of revenue for the government). Another idea maybe to give people a tax break on the first X amount and then possibly additional tax breaks if foreign money is being remitted back to India thereby encouraging remittance.

3. Tax Reforms

Tax Breaks

Tax Breaks can be based on certain sensitivities. For example give tax breaks to senior citizens for selling their homes. They may have to for income/survival or health reasons therefore penalizing them with high taxes doesn't seem fair . The same logic could be used if someone is selling property to pay off debt etc. There should be a mechanism in place that can differentiate if someone is the in the business of purchasing and selling real estate vs a one time transaction.

Income taxes

Approx Rs 2 lakhs tax free is too low especially if you look at our metropolitan cities dominated by a growing middle class and a country with a population moving from rural to urban lands. We need to help this middle class/upper middle class by having a flat/steep tax curve, where upto Rs X (1-2) crores is taxed at around 20 percent. Over and above this income level the tax rate can start jumping with the extreme rich falling in the highest tax bracket which can possibly be as high as ~40\%. This will help with distribution of wealth while fuelling consumer spending and therefore the economy.

Deductions

I believe we need to focus on encouraging investment by giving deductions on socially beneficial sectors such as health, education , mortgage etc rather than rent or car allowance. For example, we would be better of giving a deduction to encourage buying a home and giving more of a deduction for mortgages vs rent. We cap the mortgages on deduction but not on rent which does not promote savings.


Voluntary Disclosure and Conversion

I believe we should have a program allowing citizens to convert their unofficial currency tax free thereby bringing in more currency into the economy. This should be allowed over a six to twelve month period with no cap thereby encouraging and giving people a one time chance to clean up their accounts and increase transparency.

4. Voting in our Democracy

I will be the first to agree it is a disgrace that the educated affluent class who should be taking an interest do not turn out in the numbers they should, however, easing some issues will help leave no excuse to not vote. I would urge you to look into increasing the efficiency in the voter registration process and implement an absentee ballot for Indian across the world so as to help us all be an integral part of new thriving India.

I realize this email does not have one theme and may even seem haphazard but I was keen on expressing my views and am looking for insight from you. Thank you for your patience. I can be reached via email or at [email protected] or at 91+ 9920181075.

Sincerely,
Tarana Lalwani

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