In the wake of the Indo-USdiplomatic spat over the arrest of Devyani Khobragade, Indian officials probing the working of an American Embassy school in New Delhi were "outraged" to find that it had adopted several "tax-avoidance" schemes, a media report here said.
The New York Times said in a report that administrators at the American Embassy School have "quietly admitted" that the school undertook a variety of tax-avoidance schemes for years, including one in which they instructed some female teachers whose husbands also worked at the school to list their occupations on visa?applications as "housewife".
"The more the Indians looked, the more outraged they became," the NYT report, coming in the wake of the resignation of US ambassador to India Nancy Powell, said.
Given the revelations about the school, Indian officials are refusing to renew teacher visas till the case is resolved.
This has resulted in nearly 20 teachers at the school leaving in recent weeks.
The report said that unless the issue is resolved, nearly a quarter of the school's teaching staff could be forced to leave before classes end in June.
"If the controversy remains unsettled into the fall, the school widely considered one of the best international schools in the world and a key recruiting tool here ? could close," it added.
As a solution, school officials have proposed raising fees for the next school year by a third to become tax compliant, besides proposing that an additional USD 5,000 be charged for students needing remedial help in English instruction.
However, given that students from other nationalities form a majority at the school, teacher departures and fee increases have shocked many of New Delhi's expatriates.
Investigations into the United States duty-free commissary and a recreational club have also been controversial.
About 50 nations, including Chile, Peru, Sweden and Belgium, got duty-free goods at a diplomats-only store at the US Embassy until the Indian government sent letters to these countries ending this privilege, the NYT report said.
"Some ambassadors have quietly grumbled that they have scrambled in recent months to buy wine, whiskey and other goods needed for social functions,?with some threatening to end privileges to Indian diplomats in their home countries ? potentially setting off a global cascade of diplomatic tiffs," it added.
The American Community Support Association (ACSA), a recreational club with a swimming pool, bowling alley, baseball diamond, restaurant and hair salon, for expatriates on the US Embassy compound, too is facing problems.
"To the Indians, the club is an insulting colonial holdover because it accepts Americans and those sponsored by diplomats, which means Indians are largely excluded," the report said.
"ACSA cannot continue in its current form. It will have to change in a manner that makes it compliant with rules and laws," the NYT report quoted a senior Indian diplomat as saying.