Govt defers implementation of GAAR to April 2016
14 Jan 2013
The government today decided to defer the implementation of the General Anti-Avoidance Rules (GAAR) to 1 April 2016, giving respite to investors who have routed funds through tax havens.
Announcing the decision, finance minister P Chidambaram said the government has accepted major recommendations of the Shome Committee on GAAR.
The committee headed by Parthasarathi Shome, former adviser to the finance minister, has submitted two reports – advising caution on GAAR and recommending against retrospective amendments relating to indirect transfers.
The two laws, introduced by former finance minister Pranab Mukherjee in April 2012, had invited criticism from foreign investors who have been routing capital through tax haven states like Mauritius, causing huge revenue loss to the government.
The measure has only helped to stem the flow of investments from overseas at a time when the country was in dire need for capital.
The General Anti-Avoidance Rules, which had been scheduled to be implemented from April 2014, will now come into effect from 1 April 2016.
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