PC keeps some GAAR sops out of Finance Bill
Finance minister P Chidambaram has excluded some of the major relaxations in the General Anti-Avoidance Rules (GAAR) he had announced in January from the Finance Bill 2013-14 for greater flexibility in modifying them.
While approving the recommendations of the Shome panel that reviewed GAAR to make it more acceptable to investors, Chidambaram had said on January 14 that the anti-tax avoidance rules will be applied on business arrangements only if the tax benefit sought was R3 crore or more.
The minister had also agreed that GAAR will not be invoked to deny tax benefit on investments made before August 30, 2010.
Mauritius-based Foreign Institutional Investors (FIIs), who hold listed securities in India, were thus assured that they will not be asked to pay short term capital gains tax of 15% when they sell such assets after GAAR comes into force in April 2016. However, the two decisions are not part of the Finance Bill, 2013.
Central Board of Direct Taxes (CBDT) chairperson Poonam Kishore Saxena told FE that these decisions would indeed be part of the rules to be made under the Income Tax Act.
“GAAR will come into force only in 2016. We have a lot of time,” said another finance ministry official. Leaving the cut off date to grandfather the investments already come into India and the monetary threshold to invoke GAAR to be included in the rules gives the government enough flexibility to further relax or tighten them if needed closer to the date of implementation. Even after
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