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Jul 12, 2012, 08.23 AM IST
The Central Board of Direct Taxes today issued draft guidelines for the implementation of the General Anti-Avoidance Rules, or GAAR.
The CBDT has said that a monetary threshold is a must for invoking GAAR provisions, and that the tax rules will apply to income accruing only on or after April 1, 2013.
The guidelines state that GAAR will be invoked only if a foreign institutional investor takes the benefit of any double taxation avoidance treaty. However, this does not apply for cases of non-residents’ investment.
Also, GAAR provisions will not apply in cases where tax treaty agreements are not invoked.
CBDT has also called for setting up an approving panel of not less than three members that will approve cases that may or may not come under the ambit of GAAR. Of these panels, one will be situated in Delhi.
CNBC-TV18 earlier today reported that the government was going to i ssue a clarification on GAAR . Prime Minister Manmohan Singh also said instances will be provided where GAAR will be invoked so as to clear the air.
India’s apex body for administration of taxes in May had formed a six-member committee to draft guidelines for enforcing GAAR, introduced in the Union Budget to crack down on tax cheats.
Tags: Central Board of Direct Taxes, General Anti-Avoidance Rules, GAAR, foreign institutional investor
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