If Budget 2012-13 by former finance minister Pranab Mukherjee was about retrospective amendments and GAAR - Prime Minister Manmohan Singh's tenure as finance minister is about holding back nearly all those decisions - although it is being through the time-tested method of committees, reports CNBC-TV18 as Monday, July 30 is set to be remembered as a seminal day in Indian tax policy formulation.
Parthasarthi Shome has emerged as the PM's man for all tax troubles. After putting Shome in charge of coming up with guidelines for the controversial GAAR, the PM has now expanded the ambit of the existing Shome panel to look into tax issues related to FIIs and portfolio investments.
According to a PMO statement, "It is necessary to have clarity on the tax liability of portfolio investors and foreign institutional investors as a result of this amendment particularly when the investment is made through a registered stock exchange in accordance with SEBI guidelines and purely in the form of portfolio investment." Experts have welcomed the latest move.
Shyamal Mukherjee, joint tax leader, PwC India, said, "The PMO is clearly sending out a message and the outcome is all these committees mandated to relook and present a fresh view on the problems that are troubling industry."
Experts also took heart from another aspect of the PM's decision. All the clarifications will be harmonised with the GAAR guidelines to address any residual concerns outside of this proposed law. This, though, may not address pending doubts over Vodafone.
"This is clearly restricted to FIIs and portfolio investors who are registered with the stock exchange in accordance with the SEBI guidelines," adds Shyamal Mukherjee.
Shome has time till Sepetember 30 to present the GAAR guidelines and FIIs are keenly awaiting the recommendations.
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