into – namely, retrospective amendments including that on taxation of cross-border transactions with underlying Indian assets. While Vodafone has received a fresh tax demand from tax authorities under the retrospective amendment that overturned the SC judgement, the tax authorities have scheduled a meeting with the firm this week.
Mukesh Butani, chairman, BMR Advisors said: “Several path-breaking changes proposed to the law could mean significant dilution of the 2012 budget proposals. Appropriate provisions have been made for initiating GAAR proceedings by way of show cause notice (to be issued by the taxman) and a reasonable opportunity to the tax payer. This means due process of law coupled with justness and fairness. He added: “The panel for evoking GAAR shall include representatives from the ministry of law and individuals having knowledge of business accounting and commerce. This will bring some degree of independence. Similarly, GAAR shall apply only to that part of arrangements which is classified as impermissible. GAAR and Specific Avoidance Provision shall not apply simultaneously.”
Sunil Kapadia, tax partner, Ernst & Young said: “Investors often come together for reasons other than tax avoidance to benefit from being under a common jurisdiction. GAAR will need to be carefully applied in such cases.”