Within a fortnight of the Finance Ministry issuing draft guidelines on GAAR, Prime Minister Manmohan Singh on Friday set up a committee to prepare fresh norms on the controversial tax provision to bring “greater clarity” and prepare a roadmap by September 30 for its implementation.
The four-member committee, to be headed by ICRIER chief and taxation expert Parthasarathi Shome, will submit its report after consulting and taking feedback from stakeholders.
“The Prime Minister has approved the constitution of an Expert Committee on GAAR to undertake stakeholder consultations and finalise the guidelines for GAAR (General Anti-Avoidance Rules),” a PMO statement said.
“This committee would manage the consultation process and finalise the draft GAAR Guidelines,” it said.
The setting up of the committee to hold wider consulations on the controversial tax provision comes within a fortnight of the Finance Ministry issuing draft guidelines. However, the Prime Minister, who holds the Finance portfolio, was quick to distance himself from it, saying that he had not approved these.
Introduction of GAAR, which was proposed by then Finance Minister Pranab Mukherjee in the Budget 2012-13 to check tax evasion, had triggered outrage by foreign investors following which its implementation was postponed till April next year.
“There is a need to have greater clarity on many other fronts. With this in view, the Prime Minister has constituted this Expert Committee which will bring transparency and a high degree of technical expertise to the consultation process,” the PMO statement said.
“While postponing GAAR by one year to 2013 was a very welcome move, a widespread consultative process is necessary to generate a discussion on GAAR provisions so that there is an informed debate on how GAAR is going to operate,” is said.