treaties. It appears that GAAR may continue to override tax treaties in cases involving unacceptable tax avoidance and all the recommendations of the committee have not been accepted in the matter.
Investments made before August 30, 2010, i.e. the date of introduction of Direct taxes Code Bill 2010 in Parliament, will not be subject to GAAR. What happens to transactions entered into between August 30, 2010, and April 2016 is not very clear. At the time of actual implementation of GAAR, the date of August 30, 2010, may need to be advanced closer to the date of actual implementation of GAAR as suggested by the review committee. Otherwise, some uncertainty will prevail in relation to the transactions on and from August 30, 2010, until the date of actual implementation. Helpful clarifications have been provided in relation to the approving panel, which will examine the applicability of GAAR on transactions. However, it is announced that directions issued by the approving panel will be binding on both the tax authorities as well as the taxpayer. This is a new development and will impact the forums available to the taxpayer to dispute applicability of GAAR on eligible transactions.
Hopefully, the Finance Bill 2013 expected next month will create a fine balance between the interests of revenue and the taxpayers and provide much-needed clarity on the issues discussed.
The author is partner, J Sagar Associates. Views are personal