GAAR panel likely to submit final report today

GAAR panel likely to submit final report today New Delhi: The Parthasarathi Shome panel, looking into the taxation issues relating to GAAR (General Anti-Avoidance Rules), is likely to submit its final report to Finance Minister P Chidambaram on Monday.

"The final report of the Parthasarathi Shome committee will be submitted to the Finance Minister on October 1, 2012," sources in the Finance Ministry said.

Prime Minister Manmohan Singh in July had set up a committee under tax expert Parthasarthi Shome to address concerns of foreign and domestic investors on GAAR. The committee had already submitted its draft report to Chidambaram on September 1.

The government had later expanded the scope of the expert committee on GAAR to include concerns of all non-resident tax payers.

As a step towards reassuring global investors, the committee in its draft report had recommended postponement of the controversial tax provision by three years and abolition of capital gains tax on transfer of securities.

In order to address the concerns of Mauritius-based investors, the Shome panel had suggested that the provisions of the GAAR should not be invoked to "examine the genuineness of the residency of an entity set up in Mauritius".

The draft had further said that the government should retain the provisions of the CBDT circular, which was issued in 2000, on acceptance of Tax Residence Certificate (TRC) issued by the Mauritius.

Besides, it had suggested the government should issue a circular to clarify GAAR provisions along with illustrations.

The Committee had recommended that GAAR be applicable only if the monetary threshold of tax benefit is Rs 3 crore and more.

In view of the concerns expressed by investors, the government had already postponed implementation of GAAR by a year to April, 2013. The proposal was introduced in Budget for 2012-13 by the then Finance Minister Pranab Mukherjee.

PTI