A study on the rich has revealed that 4,000 wealthy Indian citizens have migrated (net outflows) in 2015, ranking the country fourth in a list of nations that have experienced such a movement of high net worth individuals. International property consultancy Knight Frank in its Knight Frank Wealth Report 2017 has tracked the growing trend of the movement of money across borders, particularly popular with well-heeled global millionaires with net worth of over $1 million (Rs 6.7 crore), excluding primary residence. Search for safe haven The report cited the ever growing demand to move wealth into safe haven as the key driver for such movement, as protection of capital rather than a return on them plays on the minds of the rich individuals. France, China and Italy were only ahead of India as the net exporter of such wealthy, according to the study, published earlier this month."The overriding impression of any analysis of global wealth flows is one of flux. Nevertheless, there are two constants: first, ever growing demand from the wealthy to move their money into safe havens; and second, the corresponding determination of governments to exercise control over that process," the report said. Samantak Das, chief economist of Knight Frank India, said better business environment and opportunities were the key reasons why HNW (high net worth) Indians were taking up primary citizenship of other countries, apart from personal and family reasons. An India-specific peek also suggests that "inheritance tax" is the biggest concern for the wealthy when it comes to passing down wealth to the next generation, though there was no such tax in the country when the study was conducted. Budget jitters However, three proposed changes in the budget this year suggested that some of the fears expressed by the respondents of the reports might have some basis. The government has withdrawn tax benefits enjoyed by private trust, one of the most popular financial structure employed by wealthy Indians for succession planning. The proposed changes, to be effective from next month are being dubbed as pseudo inheritance tax by some experts. The study found that 29 per cent of the wealth of the HNI Indians is in personal business, which is often passed on to the next generation through trusts. Moreover, dividing wealth equitably among the children is one of the top concerns of such wealthy Indians, apart from the fear of imposition of inheritance tax. The Modi government's resolve to strengthen anti-abuse law when it comes to tax and the role of central investigating agencies have drawn criticism from Opposition political parties. Trinamul Congress chairperson and Bengal chief minister Mamata Banerjee has complained several times that big industrialists are leaving the country. Das said wealth was also moving out of India when the next generation was settling abroad after getting an overseas education. Apart from the UK, Singapore, Hong Kong and the UAE are some of the popular destinations where Indians are seeking permanent residencies.
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