General Anti Avoidance Regulations implementation by 3 years:
Under the current provisions of the Act, the chapter on GAAR was to be effective from Financial Year starting from 1st April, 2013. The GOI has deferred the implementation of GAAR provisions by 2 years and hence the same would be made effective from Financial Year starting from 1st April, 2015.
Expert Committee had recommended that GAAR provisions should not apply to FIIs who choose not to obtain any benefit under Tax treaty and subject itself to Act.
The General Anti-Avoidance Rules provisions (‘GAAR’) were introduced in the Indian Income Tax Act (‘Act’) vide Finance Act 2012, with a view to curb the tax evasion. Later, in June 2012 the Central Board of Direct Taxes committee had issued the Draft Guidelines providing insights into the applicability of the GAAR provisions. However the introduction of GAAR evoked sharp negative reactions from investors and business world and thus the Government of India (‘GOI’) in a move to soothe the frayed nerves of investors and businessmen alike, had constituted an Expert Committee (‘EC’) under the chairmanship of Dr Parthasarathi Shome on GAAR to frame a roadmap on the tax avoidance proposals and provide greater clarity on GAAR.