Industry body Assocham has sought deferment in the introduction of General anti-avoidance rules (GAAR) under the Indian income tax law.
The income tax law must be amended immediately so as not to introduce GAAR from assessment year 2016-17 (financial year 2015-16), Assocham said in a memorandum to Revenue Secretary Shaktikanta Das.
This formed part of set of recommendations to the Government post the chamber's 11th international tax conference held in the capital in early October.
GAAR is set of rules framed to minimize tax avoidance. Under this concept, tax authorities in a country deny the tax benefits of transactions or arrangements which do not have any commercial substance.
At this juncture to introduce GAAR as part of tax law is not warranted, the apex industry chamber has said.
Neither is Indian economy matured enough to stand up to the exacting standards of GAAR examination nor is the tax administration ready to handle a sophisticated instrument like GAAR, the chamber said.
If GAAR is introduced at this stage, it will only act as a handle for more harassment of taxpayers, thus making the tax administration more adversarial, the chamber has said.
Direct taxes code
Assocham is also not in favour of enactment of a new direct taxes code (DTC). It has urged the Modi-led Government not to introduce DTC at all as this would entail more cost than benefit.
A certain level of stability has been achieved with the present law. At this juncture, introduction of a new law with new concepts will only unsettle the situation and more time will be spent on understanding it and putting a mechanism to administer it, the chamber has said.
On the controversial issue of indirect transfer of shares, Assocham has suggested that the provisions to tax such gains be applied prospectively with effect from April 1; 2012.