The industry was cautious in welcoming the recommendations of the Parthasarathi Shome-chaired committee on General Anti-Avoidance Rules (GAAR) and warned that such taxation rules would hit foreign direct investment.
During a seminar organised by Federation of Indian Chamber of Commerce and Industry here recently, corporates welcomed the committee’s suggestion that GAAR be deferred by three years to give more time for its effective implementation.
Speaking on the occasion, Rajib Hota, director of Income Tax, International Taxation, Chennai, said that the panel had submitted the report and the rules and regulation would be set by the end of this month.
Corporates also questioned the timing of GAAR as it was coming at a time when the country required one trillion dollars for infrastructure development, of which 47 per cent was through private investment.
Viswanathan, chief financial officer of Inautix, said that due to GAAR, the multinational parent companies were jittery and the government had to rethink on implementing GAAR if India wanted FDI. He also warned against flight of capital to other countries.
Hota stressed the need for joint effort by industry and tax authorities to improve administration and facilitation of tax payment.
On taxing overseas deals involving local assets, S Sriram, partner, BMR Advisors, said that Indian jurisprudence was not developed on international law. The recommendation like putting all international transaction before officials was sure to result in prolonged litigation. K R Girish, head of tax dispute resolution, B S R and Co, and M Venkatachalam, executive director of PwC, also spoke on the occasion.
Aravind Srivatsan, partner, global international corporate tax, BSR and Co, made a presentation on the new GAAR report, previous draft guidelines and some case studies.
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