Real estate tycoon Surendra Hiranandani, co-founder of the Hiranandani Group, has given up his Indian passport to become a citizen of Cyprus, an island nation in Eastern Mediterranean.
Hiranandani, 63, who along with his elder brother Niranjan turned their real estate company into one of the largest in the country and developed Powai into a thriving residential area, 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 confirmed having given up Indian citizenship, telling Mumbai Mirror that taxation was the last thing on his mind when he made such a decision.
“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 said.
Harsh is Hiranandani’s son from his first marriage. He is now married to actor Akshay Kumar’s sister Alka Bhatia. According to Forbes, Surendra Hiranandani’s net worth is $1.29 billion, and he is among the 100 richest Indians.
In a conversation with Mirror yesterday, Hiranandani lamented the state of construction business in the country, 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. According to a report compiled by Ruchir Sharma and his team from Morgan Stanley Investment Management, around 23,000 rich Indians have given up the citizenship since 2014, with 7,000 leaving the country in 2017 alone.
Alarmed at such migration, the Central Board of Direct Taxes (CBDT) formed a five-member committee in March to see how the economy will suffer with the exit of high net worth individuals from the Indian tax bracket.
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.”