Shome panel favours deferment of GAAR implementation by 3 yrs
The implementation of General Anti-Avoidance Rules (GAAR) should be deferred by three years to April 2017, the Parthasarathi Shome Committee has suggested in its final report on the controversial tax proposal.
The Committee in its final report, which was submitted to Finance Minister P Chidambaram on September 30, 2012, has suggested that GAAR provisions should not be invoked on those entities having tax residency certificate from Mauritius.
"...GAAR should be deferred for 3 years. But the year, 2016-17, should be announced now. In effect, therefore, GAAR would apply from assessment year 2017-18," Shome, who is now advisor the Finance Minister, said in his final report.
The Committee also suggested abolition of capital gains tax on transfer of securities and doing away with Securities Transaction Tax (STT).
"The Government should abolish the tax on gains arising from transfer of securities which is subject to STT, whether in the nature of capital gains or business income, to both residents as well as non-residents," the report said.
The final report of the Shome Committee, which was set up by Prime Minister Manmohan Singh in July 2012 to allay investor concerns, was made public today.
Earlier in the day, Finance Minister P Chidambaram announced deferment of GAAR by two years till April 2016, a move which sent the stock market higher by 243 points.
The Committee has recommended that GARR be applicable only if the monetary threshold of tax benefit is Rs 3 crore and more.
In view of wide-spread concerns by foreign investors, the government had earlier postponed implementation of GAAR
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