Industry cautious in welcoming Shome panel recommendations on GAAR

Chennai:

Industry on Saturday was cautious in welcoming Parthasarathi Shome-chaired committee recommendations on General Anti-Avoidance Rules (GAAR) and warned such taxation rules would hit foreign direct investment.

During a seminar organized by Federation of Indian Chamber of Commerce and Industry here on Saturday, 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 panel has submitted the report and rules and regulation will be set out by the end of this month.

Corporates also questioned the timing of GAAR as it is coming at a time when the country requires one trillion dollars for infrastructure development of which 47 per cent is through private investment.

Viswanathan, chief financial officer of Inautix, said that due to GAAR, the multinational parent companies are jittery and the government has to rethink on implementing GAAR if India wants 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 jusrisprudence is not developed on international law. The recommendation like putting all international transaction before officials is 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 delivered a presentation on the new GAAR report, previous draft guidelines and some case studies.