NEW DELHI: As many as 23,000 wealthy Indians have given up their citizenship since 2014, according to a report by investment and financial services firm Morgan Stanley. In fact, 7,000 of them left the country in 2017 alone.

Alarmed at this migratory trend, the Central Board of Direct Taxes (CBDT) formed a five-member committee in March to gauge the impact on the economy, the exit of high net worth individuals from the Indian tax bracket can have.

The CBDT, in an internal memo, said: “In recent times, there has been a trend of high net worth individuals migrating to other countries. Such migration is a substantial tax risk since they may treat themselves as non-residents for taxation purposes even though they may have strong personal and economic ties with India.”

The latest to join the bandwagon or rather jump ship is real estate tycoon Surendra Hiranandani, co-founder of the Hiranandani Group. The 63-year old gave up his Indian passport to become a citizen of Cyprus, an island nation in Eastern Mediterranean.

“The primary reason is difficulty in getting work visas on Indian passport. I have absolutely no issues with tax rates and other such things. My son Harsh continues to be an Indian citizen and he looks after our company’s interests in India,” Hiranandani told Mumbai Mirror.

Taxation was, however, the last thing on his mind when he took the decision, the real estate mogul added. Hiranandani who along with his elder brother Niranjan turned their company into one of India’s largest real estate companies, joins a growing list of Indian dollar millionaires (those worth at least Rs 6.5 crore) who are ditching Indian citizenship for tax havens in Europe and the Caribbean islands.

Hiranandani is among the richest 100 Indians with a net worth of $1.29 billion, according to Forbes.

India is ranked at 100 in the World Bank’s ‘Ease of Doing Business’ index, while Cyprus ranks way ahead at 53.

Hiranandani lamented the state of construction business in the country while speaking to Mirror, saying the profit margins are not more than 10% whereas developers are forced to borrow money at 12% annual interest. “If I had a chance to speak with Prime Minister Narendra Modi today, I would urge him to do something about improving the ease of getting various permissions for the real estate sector. Then, of course, there is the major problem of the rate of interest the builders are charged,” he said.

The World Bank ranks India 181st among 189 countries in terms of ease of doing business in construction industry.

