Finance Ministry suggests monetary limit in draft guidelines to invoke GAAR
To attend to investor apprehensions over taxation issues, the Finance Ministry has proposed a monetary limit for invoking the contentious General Anti-Tax Avoidance Rules (GAAR) in its draft guidelines. As per the guidelines, GAAR provisions would be invoked only in cases where FIIs choose to take the advantage of double tax avoidance agreements and the provisions will apply only to the income earned by taxpayers on or after April 1, 2013. Therefore, the rules would not apply retrospectively, as many investors had feared. An income threshold also has been suggested for invoking the GAAR. The draft guidelines also recommend establishing a 3-member Approving Panel to decide whether a particular case would attract the provisions of the GAAR. The Ministry proposed a monetary limit for invoking the controversial General Anti-Tax Avoidance Rules (GAAR) in its draft guidelines issued. Albeit the draft didn’t specify the monetary limit, it mentioned that those deals which are over a prescribed limit should be covered by GAAR provisions.
The guidelines held that the onus of proving tax liability lies with the Indian authorities and have proposed time limits for completion of various actions under the GAAR.
Month: Current Affairs - June, 2012