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.







Parliament panel pitched for balanced GAAR to check tax evasion
A Parliamentary panel scrutinising Direct Taxes Code (DTC) Bill stressed for a balanced General Anti Avoidance Rule
(GAAR) norms to check tax evasion, contending that tough regulations could upset foreign investments. In perspective
of the dreads articulated by various stakeholders on the pertinence of GAAR proposals, the committee recommended
that the (Finance) Ministry and the CBDT should seek to bring better clarity and precision to the scope of the
provisions.
A GAAR is a set of broad and general principles-based rules enacted in the tax code aimed at counteracting avoidance
of tax.
The DTC Bill intends to bring in omnibus provisions such as GAAR to prevent evasion of taxes by corporate. These
regulations are also directed at precluding reoccurrence of cases like Vodafone.
The Report by Parliamentary Panel:
 Held that there should be certainty on these provisions of GAAR so that foreign investors do not become
suspicious of investing in India and the provisions to discourage tax avoidance should not land up punishing
taxpayers who have echt reasons for entering into an authentic transaction.
Current Affairs Published on www.gktoday.in from January 1, 2012 to
September 10, 2012
 Called for Govt to get rid of dubieties with regard to applicability of the Double Tax Avoidance Agreement (DTAA)
treaties.
 Held that GARR proposals should not lead to any fiscal dubiety or equivocalness.
 Called for the Government to apply GAAR provisions prospectively so that it is not made applicable to existing
arrangements or transactions.
 Called for suitable provisions may be incorporated in the DTC Bill to protect the interest of taxpayers who have
entered into structures or arrangements under the existing law.