GAAR must be put in cold storage: Assocham

The Associated Chambers of Commerce and Industry of India (Assocham) has pitched for a postponement of General Anti Avoidance Rules (GAAR) till 2015.

Handing over a seven-point economic agenda to Planning Commission Deputy Chairman Montek Singh Ahluwalia at a meeting with him here on Thursday, Assocham president Rajkumar Dhoot cited GAAR as one of the most contagious tax proposals that had impacted investor sentiment and, hence, pitched for its postponement officially till 2015. “We feel that may be the government came under excessive pressure of the civil society movement and certain other forces which have raised the bogey of black money and tax evasion,” said the chamber memorandum submitted to Prime Minister Manmohan Singh’s economic reforms ‘Sherpa’.

Speaking to journalists after his 30-minute meeting with Mr. Ahluwalia in which other issues such as infrastructure development, delay in roll-out of the Goods and Services Tax (GST), high interest rates and problems of the SME (small and medium enterprises) sector also came up , Mr. Dhoot said: “To boost the economy, GAAR, which has been doing the rounds for the last few months and has investors worried, should be immediately put in cold storage”. “Second, pending projects such as Mumbai-Delhi Industrial Corridor should be immediately given green signal, so that investments start flowing in and boost is given to the economy,” he said.

In its agenda paper submitted to Mr. Ahluwalia, the chamber asserted that despite the global slowdown, India’s infrastructure story was intact. “The best thing about Indian infrastructure is that for the next 20-30 years, there would always remain a demand for the sectors such as power, roads, ports, airports…On top of it, we need huge investment, and there is a great scope for investment, both public and private in building of social infrastructure such as schools, colleges, universities and hospitals. The private sector would surely like to get involved in all this,” it said.

“We need to send a strong message sooner than later that, as a country, we are one and will face the rough weather with courage. After all, we ourselves are a market of 1.20 billion people who alone can generate a huge internal demand. We need to only build consumer confidence and fire the imagination of Indian entrepreneurs,” Assocham said.

On the issue of high interest rates affecting manufacturing activity and other industries, Mr. Dhoot said the RBI should be “influenced” to cut its key rates immediately and SMEs facing problems in getting loan approvals should also be provided help.