US mission's property plans hit MEA wall

The Embassy had struck a deal with a private builder for the sale of the two-acre plot located on Tilak Marg in the posh Lutyen’s Bungalow Zone of the capital for Rs 46 crore about six years back.

It had sought the mandatory clearance from the External Affairs Ministry (MEA) which did not come all these years, sources said.

No reasons were officially given by the MEA, but it was clearly linked to a dispute with the US government over imposition of property tax to the tune of USD seven million per year on some residential premises of Indian diplomats near the UN building in New York.

As the tussle went on, the value of the property at Tilak Marg went up many times prompting the MEA to contend that Rs 46 crore was not proportionate to the current market rate of the plot, the sources said.

Pursuing the matter

The US embassy is actively pursuing the matter with the MEA but no decision has yet been taken, the sources said.

In the meantime, the tax dispute relating to Indian residential premises in New York has been resolved with the American government deciding against imposing the tax.
During the litigation process in a New York court, the US government had last year argued that if foreign properties in the US were taxed, then the US would have to pay millions of dollars on taxes for its own diplomatic buildings in many countries.

Subsequently, the case was disposed of about 10 days back with a three-judge bench exempting Indian diplomatic staff residences from $7 million a year in property taxes.

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