News Hour- GAAR: Major concerns addressed, says Finance Secretary RS Gujral

NEW DELHI: Stating that major concerns of Foreign Institutional Investors (FIIs) regarding General Anti-Avoidance Rules (GAAR) had been addressed, Finance Secretary RS Gujral told ET Now that the rule would only be invoked when there are specific complaints. "It won't be easy for assessing tax officers to invoke GAAR," he said. 

GAAR was proposed as part of the annual budget for fiscal 2012-13. It aims to target tax evaders, partly by stopping Indian companies and investors from routing investments through Mauritius or other tax havens for the sole purpose of avoiding taxes. 

Gujral told ET Now that irrespective of the implementation of the Direct Taxes Code (DTC), GAAR would be applicable from April 1, 2013. Admittng that FIIs are concerned about the permissible arrangements under the amended GAAR, he said that the provisions will be finalised within two months. 

Seeking to allay investor fears, Gujral said that the various issues stakeholders have raised will be taken on board and rules will come out in two months. GAAR committee is expected to finalise its report in one month, he added. Gujral also said that a committee on transfer pricing will meet on May 25. 

Pranab Mukherjee on Monday announced that to provide greater clarity and certainty in the matters relating to GAAR, a committee has been constituted under the chairmanship of Director General of Income Tax to give recommendations for formulating the rules and guideline for implementation of GAAR provision and to suggest safeguards so that the provisions are not applied indiscriminately. 

Gujral was of the opinion that the issue with a non-government member on GAAR panel is confidentiality. He added that only Australia has a non-government person on the GAAR panel. However in Australia, GAAR is not binding, he said. 

After weeks of protest by both foreign and Indian investors, FM Pranab Mukherjee on Monday announced that the GAAR will be applied from 2013-14 onwards, deferring its application by a year. 

Speaking on amendments in the Finance Bill in parliament, Mukherjee also said the onus of proof will lie with the tax authorites and that the proposed retrospective amendment of income tax laws will not override DTAAs with 82 countries. 

Along with the announcement of the introduction of an independent member in the GAAR panel, Mukherjee also proposed an STT of 0.2% on the sale of unlisted securities. 
(Source- http://economictimes.indiatimes.com)