Washington: The US Senate has approved a Bill cutting foreign aid to India for alleged non-payment of property tax to the New York city for a building that houses its UN Mission, setting off strong protests from Indian diplomats.

The Senate, at the instance of New York Democrat Charles Schumer, approved the Bill on July 14 to cut foreign aid to India, Philippines, Turkey and Mongolia by 110 per cent of the $ 106 million they collectively owe.

Questioning the action, Indian diplomats said that as far as India is concerned, there is a legal issue involved. India, whose dues have been estimated at $ 16.37 million (about Rs 77 crore), has challenged the basis of the New York City authorities' claim, saying the building premises have not been put on any commercial use.

The city authorities have alleged that these countries have been renting out portions of their properties to staff members and commercial concerns.

Half of the Indian Mission building is used as office and the rest occupied by staff with diplomatic immunity and hence, India contends, there is no liability to pay taxes.

In the case of the Philippines, it is contended by the city that space has been leased to its national airline, a bank and restaurant. None of them has diplomatic immunity and hence, it is argued, Philippines owes taxes to the city.

The UN mission building is viewed as simply non-taxable because India derives no profit from it and the only people staying there are people with diplomatic immunity, diplomats said. It is learnt that the Indian Mission has already taken up the issue to the UN.

PTI