sitemapHome | Registration | Job Portal for CA's | Expert Exchange | Currency Converter | Post Matrimonial Ads | Post Property Ads
News shortcuts: From the Courts | News Headlines | VAT (Value Added Tax) | Placements & Empanelment | Various Acts & Rules | Latest Circulars | New Forms | Forex | Auditing | Direct Tax | Customs and Excise | ICAI | Corporate Law | Markets | Students | General | Mergers and Acquisitions | Continuing Prof. Edu. | Budget Extravaganza | Transfer Pricing | GST - Goods and Services Tax
Latest Expert Exchange
Direct Tax »
 Top 3 post office schemes with income tax benefits for you
 CBDT issues draft notification for amending computation of interest income
 Claim home loan interest for tax deduction from rental income
  CBDT notifies new communication scheme
 CBDT proposes changes to three IT forms, seeks public suggestions
 CBDT proposes amendments to three IT forms, invites public suggestions
 Income tax returns filing: This is what taxpayers must mention
 CBDT dedicates fortnight for pending appeal effect
 CBDT marks Jun 1-15 for expeditious disposal of pending appeals
 CBDT marks Jun 1-15 for expeditious disposal of pending appeals
 Special provisions of the Income Tax law: Are all incomes created equal?

Shome Committee's recommendations, a welcome shift on GAAR
September, 04th 2012

The Shome Committee Report seeks to address a number of concerns on general anti-avoidance rules (GAAR) and, thereby, mitigate the negative publicity India had received on this count. GAAR, initially sought to be introduced vide the Direct Taxes Code, was introduced a year early - as a possible response to some of the observations of the Supreme Court in the Vodafone case - the implementation was then deferred by a year as a result of all the negative publicity it got. Then, the Shome Committee was set up to hear the stakeholders and the committee has now recommended pushing implementation back by three years.

GAAR was introduced alongside the retrospective amendment of S9 seeking to tax overseas transfer of assets with underlying value in India. Together, they raised the fear that India has an aggressive tax administration that results in a proliferation of litigation; litigation is time-consuming; and, at the end of it if one succeeds, the law could be amended retrospectively.

The Shome Committee Report should be viewed as a first, but very important, step in the bridging of the trust deficit. The report, prepared after an extensive round of consultations, addresses several key issues:

It recognises the need for a consultative process and a buy-in of the key stakeholders, something that was absent when the provisions were introduced. Similar provisions introduced elsewhere in the world were after extensive deliberations.

It addresses a key issue of a need for transition. The report recommends grandfathering of the income arising from investments made prior to the GAAR regime as being covered by the earlier regime. The three-year deferment should be viewed in this light. It provides a window of opportunity to taxpayers to prepare and brace themselves for the new regime and to the tax regime to get trained to implement it.

It recognises the need to respect tax treaties; we have a right to review and renegotiate tax treaties but bypassing them through domestic legislation is not an appropriate way forward.

It brings out the important distinction between tax planning arising through legitimate choices available under the provisions of law and tax avoidance by resorting to circuitous transactions that have no commercial value and are only tax-driven.

It appreciates that choices made in real life are driven by commercial people; revenue, sitting in hindsight, needs to understand the commercial aspects and cannot impute tax avoidance. The recommendation of a five-member approving panel, including industry/professional representation, is a welcome, path-breaking one. It will considerably address the issue of trust deficit.

It provides examples of when GAAR will apply and when not and the consequences thereof. This will provide a basis of understanding and interpretation of various subjective terms and mitigate the vagaries of the subjectivity. Given that business realities and forms of transaction keep on changing, the list of illustrations will need to be updated on an ongoing basis.

Home | About Us | Terms and Conditions | Contact Us
Copyright 2018 CAinINDIA All Right Reserved.
Designed and Developed by Binarysoft Technologies Pvt. Ltd.
Enterprise Resource Planning Solutions ERP Solutions Enterprise Resource Planning Software Solutions ERP Software Solutions Supply Chain Management Solutions SCM Solutions Supply Chain Management Software Solutions SCM Software Solutions Enterprise Resource Planning Solutions India ERP Solutions India Enterprise Resource Planning Software Solutions India ERP Software Solutions India Supply Chain Management Solutions India SCM Solutions India Supply Chain Management Software Solutions India SCM Software Solutions India

Transfer Pricing | International Taxation | Business Consulting | Corporate Compliance and Consulting | Assurance and Risk Advisory | Indirect Taxes | Direct Taxes | Transaction Advisory | Regular Compliance and Reporting | Tax Assessments | International Taxation Advisory | Capital Structuring | Withholding tax advisory | Expatriate Tax Reporting | Litigation | Badges | Club Badges | Seals | Military Insignias | Emblems | Family Crest | Software Development India | Software Development Company | SEO Company | Web Application Development | MLM Software | MLM Solutions