Sunday, August 21, 2016

New Income Tax Rules to Exclude GAAR

Scheduled to kick in next year, the uncertainty over GAAR (general anti avoidance rules) has led the government to announce that the provisions of this tax regime will not apply to FIIs (foreign institutional investors) on the income derived from transfer investment made before the provisions kick in on April 1, 2017.

After consultation with various stakeholders from the industry, the finance ministry has announced the new changes. It must be noted that the GAAR is aimed at scrutinizing business transactions entered into for evading taxes. Transactions that fail to pass through the GAAR filter will be subject to taxes under prevailing laws. The changes are aimed at reassuring foreign investors about GAAR and reinstalling confidence in the business world. The amendment is in line with recent changes made to the India-Mauritius tax treaty.

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