(Useful Article) General Anti Avoidance Rule (GAAR) by VVR IAS

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Sep 12, 2012, 5:43:26 AM9/12/12

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General Anti Avoidance Rule (GAAR)

Important Topic for General Studies Mains - 2012

Recently, The expert committee on GAAR headed by Parthasarathi Shome formed to address the concerns for foreign and domestic investors has recommended the postponement of the controversial tax provision by three years till 2016-17 along with the removal of capital gains tax on transfer of securities.

Coming up as an assurance to the foreign institutional investors (flls) through the Maturitius route, the committee suggested that the GAAR provisions should not be invoked to examine the genuineness of the foreign investor entities. Furthermore, set up mainly to bring about tax clarity and address the concern of foreign investors, the panel has been told to look into the various issues pertaining to all non-resident tax payers.

Some of the recommendations made by the committee are as follows:

- GAAR should be applicable only if the threshold of tax benefit is rs. 3 crore and above.

- The postponement of GAAR has been recommended on administrative ground, considering it as an extremely advanced instrument of tax administration for which intensive training of tax officers is required, said the panel.