India To Defer GAAR Implementation
The Finance Minister Shri Pranab Mukherjee made the announcements in his opening remarks on the parliamentary debate on the Finance Bill 2012, which contains elements of the GAAR scheme.
Mukherjee proposed deferring the implementation of the GAAR provisions by one year. This, he said, will provide more time to both taxpayers and the tax administration to address all issues relating to the system. The provisions will now apply from the 2013-14 financial year, which begins next April.
Commenting on the news, Mukesh Butani, Taxand India, said, "The Finance Minister's proposal to undertake substantive amendments are bold and laudable. Besides deferring the GAAR provisions by a year to coincide with DTC, he has accepted the most important proposal of the standing committee on DTC, to shift the onus from the tax payer to the tax administration. This amendment will come as a relief to taxpayers who echoed scepticism on the implementation of GAAR. The one year deferral means that we will have a debated piece of legislation. I would anticipate that the enabling rules are thrown open for public debate such that the views of businesses and chambers are factored in for such substantive changes in law."
"The amendment to provide a third independent member on the GAAR panel by way of the Joint Secretary from the Law Ministry is a step in the [right] direction and will provide some level of independence. Finally, testing a transaction which could potentially attract GAAR with the Advance Ruling authority would mean that taxpayers who wish to seek certainty on law can approach this quasi judicial forum and it would apply to all forms of transactions," Butani concluded.
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First published on Tax News, 9 May 2012