‘Foreigner-friendly’ Govt defers GAAR by 2 years
15 Jan 2013 6:33 AM IST
Giving a big relief to overseas investors, the government has postponed implementation of controversial, the General Anti Avoidance Rules (GAAR) provisions by two years to 1 April 2016.
'Having considered all the circumstances and relevant factors, the government has ...decided that provisions of Chapter 10A of the Income Tax Act (dealing with GAAR) will come into force from 1 April 2016 as against 1 April 2014,' Finance Minister P Chidambaram said here on Monday.
The General Anti Avoidance Rules provisions, introduced by the then Finance Minister Pranab Mukherjee in the Budget 2012-13, were aimed at checking tax avoidance by overseas investors. The proposal, however, generated controversy, with investors expressing apprehensions that it would result in unnecessary harassment by tax authorities.
The decision to postpone the implementation, Chidambaram said, follows the recommendations of the Shome Committee which was set up by Prime Minister Manmohan Singh in July last year to look into investor concerns.
The government, Chidambaram further said, has accepted major recommendations of the panel with some modifications.
'The modifications that we have done are fair, non-discriminatory, just and strike a balance between interest of revenue and interest of investors. So, all apprehensions should now be set addressed,' he said.
The GAAR provisions, the Minister also clarified, would override the double taxation avoidance agreement (DTAA) benefits if the arrangements were intended solely to evade taxes. No investor, Chidambaram said, 'should now have any apprehension about his investments in India. Only those arrangements, which have been made for the purpose of tax avoidance, will be brought under GAAR, he added.
RS SOARS BY 27P TO ONE-WEEK HIGH AGAINST $
Mumbai: Tracking a sharp rise in local stocks, the rupee on Monday bounced back by 27 paise to close at over one-week high of 54.49 against US dollar as government delayed the implementation of controversial GAAR and a fall in wholesale inflation for December boosted rate cut hopes. The rupee's upward movement was aided by a good dose of dollar selling by exporters and some banks, amid a weak dollar overseas, said forex dealers.
At the Forex market, the domestic unit commenced a tad higher at 54.75 a dollar from last Friday's close of 54.76 and soon touched a low of 54.82. However, it quickly bounced back to a high of 54.42 before ending at 54.49 — a rise of 27 paise or 0.49 per cent.
ANTI-INDIAN STEP CHEERS MARKETS; SENSEX LEAPS BY 243 TO TWO-YEAR HIGH
Mumbai: The Bombay Stock Exchange (BSE) benchmark Sensex on Monday jumped by 243 points to close at two-year high on all-round buying as government delayed implementation of controversial General Anti Aviodance Rules (GAAR) by two years amid rate cut hopes getting a shot in the arm as inflation in December declined to three-year low.
Registering its best gain in the calendar year, the BSE 30-share index remained in positive throughout the day to settle at 19,906.41 - a rise of 242.77 points or 1.23 percent.
Similarly, the 50-share National Stock exchange (NSE) index Nifty shot up by 72.75 points, or 1.22 per cent, to 6,024.05. Inflation based on the wholesale prices declined to a three-year low of 7.18 per cent in December, triggering buying in stocks. 'Today's inflation print has actually strengthened the debate over whether the Reserve Bank of India (RBI) should deliver a 25 basis points or a 50 basuis points rate cut on 29 January,' said Barclays Research. Soon after, the government said it has postponed implementation of controversial GAAR by 2 years to April 2016. 'The market sentiment was boosted by Finance Minister P Chidambaram's decision to defer implementation of General Anti-Avoidance Rules,' said Sanjeev Zarbade, Vice President, PCG Research, Kotak Securities.
'Having considered all the circumstances and relevant factors, the government has ...decided that provisions of Chapter 10A of the Income Tax Act (dealing with GAAR) will come into force from 1 April 2016 as against 1 April 2014,' Finance Minister P Chidambaram said here on Monday.
The General Anti Avoidance Rules provisions, introduced by the then Finance Minister Pranab Mukherjee in the Budget 2012-13, were aimed at checking tax avoidance by overseas investors. The proposal, however, generated controversy, with investors expressing apprehensions that it would result in unnecessary harassment by tax authorities.
The decision to postpone the implementation, Chidambaram said, follows the recommendations of the Shome Committee which was set up by Prime Minister Manmohan Singh in July last year to look into investor concerns.
The government, Chidambaram further said, has accepted major recommendations of the panel with some modifications.
'The modifications that we have done are fair, non-discriminatory, just and strike a balance between interest of revenue and interest of investors. So, all apprehensions should now be set addressed,' he said.
The GAAR provisions, the Minister also clarified, would override the double taxation avoidance agreement (DTAA) benefits if the arrangements were intended solely to evade taxes. No investor, Chidambaram said, 'should now have any apprehension about his investments in India. Only those arrangements, which have been made for the purpose of tax avoidance, will be brought under GAAR, he added.
RS SOARS BY 27P TO ONE-WEEK HIGH AGAINST $
Mumbai: Tracking a sharp rise in local stocks, the rupee on Monday bounced back by 27 paise to close at over one-week high of 54.49 against US dollar as government delayed the implementation of controversial GAAR and a fall in wholesale inflation for December boosted rate cut hopes. The rupee's upward movement was aided by a good dose of dollar selling by exporters and some banks, amid a weak dollar overseas, said forex dealers.
At the Forex market, the domestic unit commenced a tad higher at 54.75 a dollar from last Friday's close of 54.76 and soon touched a low of 54.82. However, it quickly bounced back to a high of 54.42 before ending at 54.49 — a rise of 27 paise or 0.49 per cent.
ANTI-INDIAN STEP CHEERS MARKETS; SENSEX LEAPS BY 243 TO TWO-YEAR HIGH
Mumbai: The Bombay Stock Exchange (BSE) benchmark Sensex on Monday jumped by 243 points to close at two-year high on all-round buying as government delayed implementation of controversial General Anti Aviodance Rules (GAAR) by two years amid rate cut hopes getting a shot in the arm as inflation in December declined to three-year low.
Registering its best gain in the calendar year, the BSE 30-share index remained in positive throughout the day to settle at 19,906.41 - a rise of 242.77 points or 1.23 percent.
Similarly, the 50-share National Stock exchange (NSE) index Nifty shot up by 72.75 points, or 1.22 per cent, to 6,024.05. Inflation based on the wholesale prices declined to a three-year low of 7.18 per cent in December, triggering buying in stocks. 'Today's inflation print has actually strengthened the debate over whether the Reserve Bank of India (RBI) should deliver a 25 basis points or a 50 basuis points rate cut on 29 January,' said Barclays Research. Soon after, the government said it has postponed implementation of controversial GAAR by 2 years to April 2016. 'The market sentiment was boosted by Finance Minister P Chidambaram's decision to defer implementation of General Anti-Avoidance Rules,' said Sanjeev Zarbade, Vice President, PCG Research, Kotak Securities.
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