Finmin to finalise anti-avoidance tax rules in 20 days

India will set final rules on tax anti-avoidance within 20 days after considering recommendations made by a government panel, Finance Minister P Chidambaram said on Monday.

The Parthasarathi Shome panel, looking into the taxation issues relating to GAAR (General anti-Avoidance Rules), today submitted its final report to Finance Minister P Chidambaram. While one related to the final GAAR report, the other was on draft report on retrospective amendments.

“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 in New Delhi.

The panel was set up by Prime Minister Manmohan Singh to examine controversial laws known as general anti-avoidance rules (GAAR), first proposed in the budget in March, that target firms and investors routing money through tax havens.

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In a previous draft report, the panel had recommended that the GAAR rules be deferred for three years.

In order to address the concerns of Mauritius-based investors, the Shome panel had suggested that the provisions of the GAAR should not be invoked to “examine the genuineness of the residency of an entity set up in Mauritius”. The draft had further said that the government should retain the provisions of the CBDT circular, which was issued in 2000, on acceptance of Tax Residence Certificate (TRC) issued by the Mauritius. Besides, it had suggested the government should issue a circular to clarify GAAR provisions along with illustrations. The Committee had recommended that GAAR be applicable only if the monetary threshold of tax benefit is Rs 3 crore and more.

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 website as early as possible,” he said.

Agencies