Mar 01 2015 : The Economic Times (Mumbai)
GAAR on Hold for 2 Years, DTC Abandoned
Vikas Dhoot
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New Delhi
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SENSIBLE MOVE DTC won't be pursued as most of its ideas incorporated in I-T Act
Staying true to Prime Minister Narendra Modi's commitment to global investors of fostering a stable and predictable tax regime to replace the era of tax terrorism unleashed by the previous UPA government, finance minister Arun Jaitley said the General Anti-Avoidance Rules (GAAR) will be deferred for two more years and investments made till March 2017 will be exempted when they are implemented.
Laying another major uncertainty to rest for taxpayers, the finance minister said the Direct Taxes Code, in the making for many years, won't be pursued any further as most of its ideas have been incorporated in the Income Tax Act.
"There is no great merit in going ahead with the Direct Tax Code as it exists today," he said, citing the well-evolved jurisprudence on existing income tax laws.
The finance minister hinted that General Anti-Avoidance Rules wasn't desirable at a time when reviving the investment cycle is critical. "There are certain contentious issues relating to GAAR which need to be resolved," the minister said, declaring that it will only apply `prospectively' from April 1, 2017. GAAR is aimed at curbing tax avoidance.
Industry experts appreciated the moves as sensible. Siemens' managing director and CEO Sunil Mathur said the move to defer GAAR and reduce corporate taxes will boost industry confidence.
"Investors now have time to prepare themselves for General Anti Avoidance Rules. Though we hoped for it to be postponed by five years, this is acceptable if the government cleans up tax administration in the meanwhile," said Daksha Baxi, executive director at law firm Khaitan & Co.
Laying another major uncertainty to rest for taxpayers, the finance minister said the Direct Taxes Code, in the making for many years, won't be pursued any further as most of its ideas have been incorporated in the Income Tax Act.
"There is no great merit in going ahead with the Direct Tax Code as it exists today," he said, citing the well-evolved jurisprudence on existing income tax laws.
The finance minister hinted that General Anti-Avoidance Rules wasn't desirable at a time when reviving the investment cycle is critical. "There are certain contentious issues relating to GAAR which need to be resolved," the minister said, declaring that it will only apply `prospectively' from April 1, 2017. GAAR is aimed at curbing tax avoidance.
Industry experts appreciated the moves as sensible. Siemens' managing director and CEO Sunil Mathur said the move to defer GAAR and reduce corporate taxes will boost industry confidence.
"Investors now have time to prepare themselves for General Anti Avoidance Rules. Though we hoped for it to be postponed by five years, this is acceptable if the government cleans up tax administration in the meanwhile," said Daksha Baxi, executive director at law firm Khaitan & Co.
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