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Updated: September 1, 2012 15:50 IST

GAAR panel to now cover non-resident tax payers

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Tax expert Parthasarthi Shome heads the panel on GAAR.
Tax expert Parthasarthi Shome heads the panel on GAAR.

The government on Saturday expanded the scope of the expert committee on General Anti-Avoidance Rules (GAAR) to include all non-resident tax payers, even as the Committee submitted its draft report to the Ministry.

The announcement to increase the scope of GAAR committee, which is headed by tax expert Parthasarthi Shome, was made after the panel in its report suggested changes in the Income Tax Act and Rules.

The committee, which was set up by Prime Minister Manmohan Singh in July to address concerns of foreign and domestic investors on GAAR, suggested the government should issue a circular to clarify GAAR provisions along with illustrations.

“The draft report has recommended certain amendments in the Income-tax Act, 1961; guidelines to be prescribed under the Income-tax Rules, 1962; circular to clarify GAAR provisions along with illustrations; and other measures to improve tax administration specifically oriented towards GAAR matters”, a Finance Ministry release said.

“It has now been decided to expand the scope of the terms of reference of the committee to include all non-resident tax payers instead of only FIIs,” it said.

The Finance Ministry had earlier on August 6, 2012 asked the expert committee to examine the applicability of the amendment on taxation of non-resident transfer of assets where the underlying asset is in India, in the context of Foreign Institutional Investors (FIIs) operating in India purely for portfolio investment.

The stakeholders, the release added, can submit their comments on the draft report by September 15.

In view of the concerns expressed by investors, the Government had already postponed implementation of GAAR by a year to April, 2013. The proposal was introduced in Budget for 2012-13 by the then Finance Minister Pranab Mukherjee.

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WOW. They are doing whatever they can to help the billionaires, aren't they? Postponement of GAAR, Abolition of capital gains taxes, allowing money through Mauritius with no taxes.. Capitalism at it's best. Make the billionaires into multi billionaires, the GDP will get better and they will say the country has become developed. What farce of a world are we living in?

from:  Deepak
Posted on: Sep 2, 2012 at 10:17 IST

GAAR has been postponed till 2015-16 as per Economic Times. So
effectively, GAAR has been scrapped and will depend on the next
government that comes in power in 2014 general elections.

from:  Mohan
Posted on: Sep 1, 2012 at 19:44 IST

Indian economy (specially in Kerala) is very much dependent on foreign investments and imposing tax on the NRIs will be a costly affair for the government. This will encourage NRI's to keep the money in foreign banks, as there is no point to send it home. Savings account will dry up and only limited cash needed at home will be sent. This policy will hit hard at low earning Indians living abroad who sent money each month for his/her family. Lets see what is important for the government, short term cash reserves as tax or long term investment of foreign currency.

from:  Varghese
Posted on: Sep 1, 2012 at 17:26 IST
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