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Current Affairs

Rishi Sunak tax controversy

Date: 11 April 2022 Tags: Miscellaneous


UK finance minister Rishi Sunak’s wife Akshata Murthy is alleged to have avoided up to £20 million (around Rs 197 crore) in UK tax.



Chancellor Sunak has already faced criticism for sharply hiking taxes despite a spiraling cost-of-living crisis.



  • Akshata Murthy is the daughter of Infosys co-founder Narayana Murthy and owns about 0.93 per cent of the shares, valued at almost $1 billion at current prices.

  • Akshata receives about £11.5 million (Rs 11.56 crore) in annual dividends from her stake in the company.


Reasons for avoiding taxes

  • Akshata is a non-domiciled citizen of the UK. Under the tax rules, she is exempt from paying any taxes generated on non-UK income.

  • She is an Indian citizen and since India does not recognise dual citizenship, Murthy is treated as non-domiciled for UK tax purposes.



The statement from Murthy says that she has been paying relevant taxes on income generated in the UK.



Several media reports claim that Murthy has routed some of her investments through Mauritius to avoid taxes in India.


Non-domicile status

  • The status applies to people who are tax residents of the UK, but have their permanent homes outside the country.

  • Individuals are required to apply for tax exemptions on foreign income of over £2,000 and are not automatically bestowed the status.

  • A non-domiciled person will automatically be deemed domiciled after residing in the country for 15 years.


Legality of the arrangement

  • The law was first introduced in 1799 during the rule of King George III, to prevent non-resident colonial rich from paying sky-high taxes in UK.

  • The tax arrangement is legal according to UK law. Chancellor Sunak had declared his wife’s tax status to the Cabinet Office when he became a minister for the first time in 2018.

  • This law has been used by country’s elite to get tax exemption due to their domicile status.