The Finance Minister has said today that GAAR provisions will be applicable only from April, 2013, reports CNBC-TV18.
As foreign investors look forward to reassurance from Pranab Mukherjee on the pending General Anti-Avoidance Rules (GAAR), it is deferred by a year. The Finance Minister has said today that GAAR provisions will be applicable only from April 2013, reports CNBC-TV18.
It seems Finance Minister Pranab Mukherjee has buckled under pressure from falling forex inflows and a jittery investor and corporate community. Mukherjee said that the ministry is amending GAAR provision in the Finance Bill. He also informed that the government is going to introduce an independent member to the GAAR panel.
He also responded to criticism of the GAAR provisions, saying the onus of proof would be with the tax authority, and not the tax-payer.
This may spell good news for market investors as most of them were hoping for a one-year delay for more clarity in guidelines and implementation.
Other tax rebates
Bowing to pressure, Mukherjee also announced a slew of measures to provide relief to the jewellery sector but offered no concessions to Vodafone involved in tax dispute.
Moving the Finance Bill, 2012 for consideration and passage in the Lok Sabha, Mukherjee halved the capital gains tax for private equity investors to 10% and relaxed the norms for arrest of persons involved in violation of Customs Act.
"The government has decided to withdraw the levy (one per cent excise duty) on all precious metal jewellery, branded or unbranded, with effect from March 17, 2012," he announced, bowing to demand within and outside the House.
He said the threshold limit for TCS (tax collection at source) on cash purchase of jewellery will be raised to Rs 5 lakh from the present Rs 2 lakh.
However, the Minister said, the threshold limit for cash purchase on bullion will be retained at Rs 2 lakh. Bullion will not include any coin or other article weighing 10 gm or less, he added, setting the tone for the debate on the crucial bill.
(With inputs from PTI)
Below is the edited transcript of interview with Bobby Parikh, chief mentor, BMR & Associates, to CNBC-TV18. Also watch the accompanying video.
Q: What is your view on the comment made by the FM on GAAR, will this come as widespread relief or will people still wait for fine print?
A: There was enormous pressure on the government on account of both retrospective amendment to Section 9 which dealt with indirect transfers as well as GAAR. There were many formulations which were floating around with regards to what the government might do. It’s good news that the government has announced to defer the GAAR by next year.
It allows the people to digest what the provisions will be and if the government was to also notify the rules that it intended to publish for the operation of GAAR currently, then both provisions as well as the rules would be available to all to consider and evaluate whether they want to recalibrate their structures, income flows and net returns, it will give a little time to be able to do that. Everything is positive till that extent.
Q: What is your reaction to the fact that the burden of proof will now move to the tax department and not on the tax payer, how much relief will this move bring about?
A: It will be a huge relief for the tax payers, as now the onus will be on the revenue to build up a strong case which they will need to defend and appeal as opposed to the tax payer. In my view this should have been the way right from the start.Subscribe to Moneycontrol Pro and gain access to curated markets data, exclusive trading recommendations, independent equity analysis, actionable investment ideas, nuanced takes on macro, corporate and policy actions, practical insights from market gurus and much more.