New Delhi: Industry chambers have asked the expert committee under Parthasarathi Shome to postpone the rollout of the controversial general anti-avoidance rules (GAAR) beyond April 2013 in the wake of the adverse economic environment.
"Introduction of GAAR at this critical juncture would further dent investments globally and, therefore, the government should withdraw the move and conduct a study to analyze the cost-benefit advantages," industry chamber Assocham told the panel on Thursday.Earlier, CII too had raised a similar demand. "Given the current macro-economic situation and India's early stage of economic development, we recommend that at this stage GAAR should be dropped from the Income Tax Act as its implementation would seriously affect investor confidence, which in turn would impact the capital market, business and the economy… This is not the right time to introduce GAAR in the Income Tax Act; only after the government can assure a transparent, non-corrupt and fair tax administration, should GAAR be introduced," CII had said.
While Ficci has not demanded a full-fledged postponement, it has sought two special carve-outs. One, it
should apply only to transactions that come into effect after April 1, 2013, the proposed date on which the arrangement will be put in place. Two, it wants the government to ensure that arrangements covered by tax treaties signed up to March 2013 should not be impacted.
"The Indian GAAR provisions may override any tax treaty entered or revised after April 1, 2013 (the effective date of GAAR). In other words, the GAAR provisions should not apply to tax treaties which are entered or revised prior to 1 April, 2013," Ficci said in its wish list to the panel.
Amid pressure from Indian companies and overseas investors, the government has already deferred the rollout of the much-criticized plan by a year to April 2013 and had also set up the committee under Shome. The panel, which is expected to submit its first draft for comments later this month, will put together the rules and also provide a roadmap, including the timeframe for GAAR rollout.
Sensex snaps 2-day rally; down 71 pts
Mumbai:The sensex on Thursday fell by 71 points to 17,657, snapping a two-day upward march, as investors booked profits in the fag end of the trading session in FMCG, bank and metal sectors amid a weak trend in Europe. The index was dragged by ITC that dropped 3.6% on reports that Australia's tough new anti-tobacco marketing laws, which among others ban logos on cigarette packs, may find resonance in India too. AGENCIES
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