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Wednesday, October 3, 2012

Final guidelines on GAAR by October end, says Chidambaram

I got a mail this morning from a shared Group in Linkedin (Direct Tax Code) which updates the following,-

The Income Tax department will come out with final guidelines by the end of this month on implementation of General Anti Avoidance Rules (GAAR), finance minister P Chidambaram said here on Tuesday.

The guidelines will be based on the suggestions of the committee headed by tax expert Parthasarthi Shome who submitted the final report to the minister earlier in the day.

"I expect Stage 1-finalisation of our views on the final report (by Shome Committee) to take place in next 10 days. Stage 2-the final GAAR rules would take another 10 days because that would require vetting by the Ministry of Law.

"So at the moment, I would like to complete Stage 1 and Stage 2 ... that would be (done) by the end of this month," Chidambaram told reporters here.

The ministry, Chidambaram said, would first finalise its report on GAAR and then consider if there was a necessity to amend the Income Tax Act. "...And the 3rd Stage if it is necessary to amend the IT Act, I am afraid it will certainly take longer because that has to go to Cabinet and the Act has to be amended," he said.

The Shome Committee had in its draft report recommended postponement of the controversial tax provision by three years to Apr 1, 2016 and abolition of capital gains tax on transfer of securities.

It had suggested that GAAR provisions should not be invoked to examine the genuineness of the residency of entities in Mauritius.

Chidambaram said the other report by the Shome Committee on indirect transfer of assets by non-resident Indians would be put up on the ministry's website for comments. "As soon as I read it and my department reads it, we will put it on website, invite comments and give about 15 days for feedback and then we will examine ... We will have to read it carefully. We will put in on the website as early as possible," he said. 

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