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The Finance Minister Mr Pranab Mukherjee, has reaffirmed that tax changes related with General Anti Avoidance Rules (GAAR) proposed in the Budget are not substantive but clarificatory in nature. These changes reiterated only the intent of the legislation.
Speaking during the bilateral meeting between India and US in Washington on Thursday, Mr Mukherjee informed that tax cases which have already been assessed and finalised up to April 1, 2012 cannot be reopened.
It was also pointed out that as per Section 149 of the Income Tax Act, no tax cases can be opened beyond six years.
Tax laws
Further the Indian tax laws are very clear that the companies making capital gains from the assets located in India will have to pay taxes either in the country of their origin or in India. It is not a case of double taxation but ensuring that companies that are liable to pay tax must pay some tax.
Software sales
On the issue of categorisation of software sales as royalties, it was informed that discussions have been held in the past between the tax authorities in both the countries and they had agreed to disagree on such characterisation.
According to the officials at the Indian Mission in Washington DC, these responses came after Mr Geithner mentioned about certain amendments proposed in the tax provisions of India’s Income Tax Act with retrospective effect.
During the meeting, Mr Mukherjee discussed bilateral economic and financial cooperation as well as the recent developments in the global economy.
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