Notice

Anti-avoidance tax rule to kick in from April 2017

Anti-avoidance tax rule to kick in from April 2017

  • Legislation against tax avoidance, GAAR, will kick in from April 1, 2017.
  • In its 2016 year-end review, the Central Board of Direct Taxes, which is the apex policy making body of the I-T department, listed its major achievements.
  • Major achievements of CBDT in the current financial year 2016-17 so far include, among others, Enactment of The Benami Transactions (Prohibition) Amendment Act, 2016, Implementation of The Direct Tax Dispute Resolution Scheme, 2016 and of GAAR from Assessment Year 2018-19.
  • General Anti-Avoidance Rule (GAAR) was part of 2012-13 Budget speech of then Finance Minister Pranab Mukherjee to check tax evasion and avoidance.
  • However, its implementation was repeatedly postponed because of the apprehensions expressed by foreign investors.
  • GAAR, which was originally to be implemented from April 1, 2014, will now come into effect from April 1, 2017 (Assessment Year 2018-19).
  • It contains provision allowing the government to prospectively tax overseas deals involving local assets.
  • There have been fears that the government may use it to target P-Notes. Through the use of GAAR, government may try to tax P-Notes as indirect investments, which could attract a tax rate of up to 15 per cent.
  • To avoid tax altogether under GAAR, an investor may have to prove that P-Notes were not set up specifically to avoid paying taxes.

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Chavan Suyash Yeshwant Rao (AIR -56, CSE 2017) from Maharashtra talks about his journey to Civil Services Examination with Success Guru AK Mishra in the latest episode of Success Speaks on Doordarshan.
He has done his MBBS from a government college in Aurangabad & MD from Maulana Azad University in Delhi. When the idea of giving the UPSC exam strikes him, he wanted to clear it in the maiden attempt. And with his determination, willpower, and dedication he cleared UPSC Exam in his First Attempt only with All India Rank 56 and his desired Indian Foreign Services.