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Put off GAAR till 2015, says Assocham

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Seeking deferment: The Deputy Chairman, Planning Commission, Mr Montek Singh Ahluwalia, and the Assocham President, Mr Rajkumar Dhoot, at a meeting in Yojana Bhavan in New Delhi on Thursday. — PTI
Seeking deferment: The Deputy Chairman, Planning Commission, Mr Montek Singh Ahluwalia, and the Assocham President, Mr Rajkumar Dhoot, at a meeting in Yojana Bhavan in New Delhi on Thursday. — PTI

Assocham has urged the Government to defer till 2015 the implementation of anti-tax avoidance rules, known as GAAR.

The suggestion was made by the Assocham President, Mr Rajkumar Dhoot, to the Planning Commission Deputy Chairman, Mr Montek Singh Ahluwalia, at a meeting here on Thursday.

Mr Dhoot submitted a seven-point action plan to boost investment sentiment.

General Anti-Avoidance Rules (GAAR) have recently entered the statute books after the enactment of the Finance Bill 2012 on May 28. But the implementation has been put off till April 1, 2013.

The rules intend to counter aggressive tax planning by corporates through abusive tax avoidance arrangements.

India Inc is lobbying hard to ensure that its implementation is postponed. GAAR has major implications for foreign investors putting money into India.

Faced with uncertainty around GAAR implementation, foreign investors may prefer not to invest here. The Finance Ministry has recently put out draft guidelines on GAAR implementation.

SEZ relook

Mr Dhoot also urged the Government to take a relook at the incentives being taken away from special economic zones.

There is a need to sustain incentives for SEZs as they are huge investment drivers, Assocham said.

The chamber has also urged the RBI not to get misled by headline inflation, which is around seven per cent.

The fact that core inflation is much lower clearly suggests that there is more scope to cut interest rates and generate demand, it said.

krsrivats@thehindu.co.in

(This article was published in the Business Line print edition dated July 6, 2012)
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