The Finance Ministry’s committee on General Anti Avoidance
Rules (GAAR) has decided to modify the draft guidelines by reducing the number
of illustrative examples.
The next meeting of the GAAR panel, which comprises officials
of the Finance Ministry and representatives of FIIs and other stakeholders, will
be held on August 12 and 13.
“The GAAR committee met today and discussed the examples
(given in the draft guidelines)... some examples will be reduced, some will be
combined”, said a senior Finance Ministry official after the meeting.
The draft guidelines have provided 21 examples to illustrate
the applicability and non-applicability of the GAAR, which was proposed by the
former Finance Minister, Mr Pranab Mukherjee, to check tax evasion by foreign
investors.
The provisions, however, invoked sharp criticism from the
foreign and domestic investors, following which the Government decided to
postpone its implementation by one year to April 2013. The Ministry had also
constituted a committee to look into the concerns of investors.
Last month, the committee came out with draft guidelines on
GAAR to seek comments from various stakeholders.
Among other things, the draft norms provide for a threshold
limit for invocation of GAAR. It also clarified that the norms would apply to
income accruing only after April 1, 2013.
The draft guidelines, however, got caught in a controversy
following a release by PMO which said the Prime Minister had yet to see
them.
“These (draft guidelines) have not been seen by the Prime
Minister and will be finalised with the approval of the Prime Minister, who
holds the Finance portfolio, only after considering the feedback received,” the
PMO had said in a release barely 12 hours after the draft norms were released by
the Finance Ministry on June 28.
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