The Central Board of Direct Taxes (CBDT) on Thursday issued draft guidelines for the implementation of the General Anti-Avoidance Rules (GAAR)..The Central Board of Direct Taxes (CBDT) on Thursday issued draft guidelines for the implementation of the General Anti-Avoidance Rules (GAAR)..The GAAR Committee in the draft guidelines has clarified that the provisions of GAAR will apply to the income accruing or arising to the taxpayers on or after April 1, 2013, which clearly indicates that GAAR would not apply with retrospective effect..The Committee has made several important recommendations to bring clarity in the implementation of GAAR:.There will be monetary threshold for invoking the GAAR provisions.The CIT should make a reference to the Approving Panel within 60 days of the receipt of the objection from the assesse.The Approving Panel should comprise of three members, out of which, two members should be of Chief Commissioners of Income Tax level and the third member should be an officer of the Joint Secretary level. There will be one Approving Panel situated at Delhi to clear all GAAR cases. However, CBDT will have the flexibility to set up more such panels in three years.Where a Foreign Institutional Investor (FII) chooses not to take the benefit of any double taxation avoidance treaty and subjects itself to tax in accordance with the domestic law provisions, then, the provisions of GAAR shall not apply to such FII.GAAR will be invoked if FII takes treaty benefit. However, this does not apply for cases of non-residents’ investment. Non- residents investments are exempted.Under normal circumstances, where specific SAAR is applicable, GAAR will not be invoked.Where only a part of the arrangement is impermissible, the tax consequences of “Impermissible Avoidance Arrangement” will be limited to only that part of the arrangement..The Committee has also provided illustrative cases in the report where GAAR provisions will be considered applicable or not applicable..The GAAR provisions were proposed by former Finance Minister Pranab Mukherjee in the union budget to prevent tax evasion and to crack down tax evaders. However, these provisions had raised lot of criticism from investors, after which the government constituted a Committee to look into their concerns..The Committee, which is headed by Director General of Income Tax (international taxation), looked into the concerns of the investors and has now come out with draft guidelines to seek comments of the stakeholders, reports ET.
The Central Board of Direct Taxes (CBDT) on Thursday issued draft guidelines for the implementation of the General Anti-Avoidance Rules (GAAR)..The Central Board of Direct Taxes (CBDT) on Thursday issued draft guidelines for the implementation of the General Anti-Avoidance Rules (GAAR)..The GAAR Committee in the draft guidelines has clarified that the provisions of GAAR will apply to the income accruing or arising to the taxpayers on or after April 1, 2013, which clearly indicates that GAAR would not apply with retrospective effect..The Committee has made several important recommendations to bring clarity in the implementation of GAAR:.There will be monetary threshold for invoking the GAAR provisions.The CIT should make a reference to the Approving Panel within 60 days of the receipt of the objection from the assesse.The Approving Panel should comprise of three members, out of which, two members should be of Chief Commissioners of Income Tax level and the third member should be an officer of the Joint Secretary level. There will be one Approving Panel situated at Delhi to clear all GAAR cases. However, CBDT will have the flexibility to set up more such panels in three years.Where a Foreign Institutional Investor (FII) chooses not to take the benefit of any double taxation avoidance treaty and subjects itself to tax in accordance with the domestic law provisions, then, the provisions of GAAR shall not apply to such FII.GAAR will be invoked if FII takes treaty benefit. However, this does not apply for cases of non-residents’ investment. Non- residents investments are exempted.Under normal circumstances, where specific SAAR is applicable, GAAR will not be invoked.Where only a part of the arrangement is impermissible, the tax consequences of “Impermissible Avoidance Arrangement” will be limited to only that part of the arrangement..The Committee has also provided illustrative cases in the report where GAAR provisions will be considered applicable or not applicable..The GAAR provisions were proposed by former Finance Minister Pranab Mukherjee in the union budget to prevent tax evasion and to crack down tax evaders. However, these provisions had raised lot of criticism from investors, after which the government constituted a Committee to look into their concerns..The Committee, which is headed by Director General of Income Tax (international taxation), looked into the concerns of the investors and has now come out with draft guidelines to seek comments of the stakeholders, reports ET.
