DON'T SHARE NUISANCE.
Final guidelines on GAAR by October end: Chidambaram
Chidambaram said the ministry would first finalise its report on GAAR and then consider if there was a necessity to amend the Income Tax Act.
New Delhi: The Income Tax department will come out with final guidelines by the end of October on implementation of General Anti Avoidance Rules (GAAR), Finance Minister P Chidambaram said in New Delhi on Monday.
The guidelines will be based on the suggestions of the committee headed by tax expert Parthasarthi Shome who submitted the final report to the Minister earlier in the day.
"I expect Stage 1-finalisation of our views on the final report (by Shome Committee) to take place in next 10 days. Stage 2-the final GAAR rules would take another 10 days because that would require vetting by the Ministry of Law.
"So at the moment, I would like to complete Stage 1 and Stage 2 ... that would be (done) by the end of this month," Chidambaram told reporters in New Delhi.
The ministry, Chidambaram said, would first finalise its report on GAAR and then consider if there was a necessity to amend the Income Tax Act.
"...And the 3rd Stage if it is necessary to amend the IT Act, I am afraid it will certainly take longer because that has to go to Cabinet and the Act has to be amended," he said.
The Shome Committee had in its draft report recommended postponement of the controversial tax provision by three years to April 1, 2016, and abolition of capital gains tax on transfer of securities.
It had suggested that GAAR provisions should not be invoked to examine the genuineness of the residency of entities in Mauritius.
Chidambaram said the other report by the Shome Committee on indirect transfer of assets by non-resident Indians would be put up on the ministry's website for comments.
"As soon as I read it and my department reads it, we will put it on website, invite comments and give about 15 days for feedback and then we will examine ... We will have to read it carefully. We will put in on website as early as possible," he said.
The government had expanded the scope of the expert committee on GAAR to include tax treatment of cases that involve indirect transfer of Indian assets such as the Vodafone-Hutchison deal in 2007.
The committee was also asked to examine taxation of non-resident transfer of assets where the underlying asset is in India, in the context of foreign institutional investors (FIIs) operating in India purely for portfolio investment and all non-resident investors.
In view of wide-spread concerns by foreign investors, the government had earlier postponed by one year implementation of GAAR, which was introduced by the then Finance Minister Pranab Mukherjee in his Budget for 2012-13 to check tax evasion.
Earlier, Central Board of Direct Taxes (CBDT) had come out with draft guidelines on GAAR which did not find favour with Prime Minister Manmohan Singh, who was then looking after the Finance portfolio. He had announced setting up of Shome pane to come up with fresh report after talking to stake holders.
In order to address the concerns of Mauritius-based investors, the Shome panel has suggested that the provisions of the GAAR should not be invoked to "examine the genuineness of the residency of an entity set up in Mauritius".
The draft further said the government should retain the provisions of the CBDT circular, which was issued in 2000, on acceptance of Tax Residence Certificate (TRC) issued by the Mauritius government.
India has been expressing concern over misuse of Double Taxation Avoidance Agreement (DTAA) by foreign investors who route their investments from Mauritius to avoid tax liability.
Recommended For You
- Champions Trophy 2017: Virat Kohli and Co Arrive in London
- BCCI Unhappy With Anil Kumble? India Looks For New Coach
- Read Exclusive Excerpts From Sita: Warrior of Mithila by Author Amish
- On Kumble, Kohli Says BCCI Following Due Process By Inviting Fresh Applications
- Pirates of the Caribbean: Things To Know Before Watching The Fifth Instalment