INDIAN STOCK MARKET

Wednesday, January 16, 2013

17/01/2013 stocks news

parsadam

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In a breather to foreign investors, especially those coming via Mauritius, the government on Monday deferred the controversial General Anti-Avoidance Rules (GAAR) by two years, making the norms effective from the 2016-17 assessment year. The Parthasarathi Shome committee had recommended that GAAR be pushed three years further. All other major recommendations of the panel were accepted, with some deviations.

The finance ministry said GAAR would override the double-taxation avoidance agreement if an arrangement was solely aimed at avoiding taxes but experts said those coming under Indo-Singapore tax treaty and having tax residency certificates from Mauritius would escape GAAR. It would, however, not be invoked on those investing in stock markets through.

The minimum income threshold below which GAAR would not apply has been set at Rs 3 crore, ensuring that small taxpayers would not be affected. To allay concerns that these rules could be misused by tax officials, Chidambaram said assessees will get an opportunity to prove the legitimacy of the arrangements employed and tax officers will be required to issue a show cause notice containing reasons before invoking GAAR.