SENSEX NIFTY
Nov 22, 2012, 03.40 PM IST | Source: PTI

Shome committee recos on GAAR being examined: Govt

The government today said it is examining recommendations of the Shome committee which suggested postponement of the General Anti-Avoidance Rules by three years and non-application of tax laws with retrospective effect on indirect transfers of assets.

The government today said it is examining recommendations of the Shome committee which suggested postponement of the General Anti-Avoidance Rules (GAAR) by three years and non-application of tax laws with retrospective effect on indirect transfers of assets.
    
"The recommendations of the Committee are under examination by the Government," Minister of State for Finance S S Palanimanickam told the Rajya Sabha in a written reply.

Also read: Govt's decision to implement GAAR in '14 not negative: KPMG
    
Committee headed by tax expert Parthasarathi Shome, set up by the government, has submitted two reports -- on GAAR and retrospective amendments relating to indirect transfers.
    
In its report on GAAR, the Minister said the Panel has recommended implementation of this advance instrument of tax administration may be deferred by three years on administrative grounds till 2016-17.
    
Amid widespread concerns over GAAR, the government had deferred its implementation till April 1, 2013.
    
The Shome panel, among other things, has also suggested abolition of tax on gains arising from transfer of securities, which is subject to securities transaction tax (STT).
     
It had also suggested that GAAR should not be invoked in intra-group transactions. It further said that a monetary threshold of Rs 3 crore of tax benefit should be fixed while applying the provision.
     
Regarding foreign institutional investors (FIIs), the report suggested that if they choose not to take any benefit under India's DTAAs, then the provisions should not be applied.
     
The four-member panel in its report on retrospective amendments said that the provisions "should be applied prospectively".
     
Noting that there are number of pending tax disputes over indirect transfer, the panels said this is also a matter that needs to be addressed.
    
"One way to solve pending disputes is...through conciliation, which is a well recognised method of dispute resolution. Arbitration may not be the best option when resolution is the objective," the committee had said.
    
The retrospective amendments were aimed at bringing under tax net Vodafone type deals.
    
The report on GAAR had also recommended that where the circular number 789 of 2000 with respect to Mauritius is applicable, the GAAR provisions should not be applied to examine the genuineness of the residency of an entity set up in that country.

ADS BY GOOGLE

video of the day

Market in fine fettle; 2014-end Sensex target at 26300:Citi

Explore Moneycontrol

Copyright © e-Eighteen.com Ltd. All rights reserved. Reproduction of news articles, photos, videos or any other content in whole or in part in any form or medium without express written permission of moneycontrol.com is prohibited.