India to Clarify Tax Rules Soon

October 9, 2012 Taxation in India

Palaniappan ChidambaramNEW DELHI – Investors and entrepreneurs operating in India will soon have some much sought after clarity regarding proposed changes to the country tax rules, with new legislation due to be presented within months.  

While answering questions at the Economic Editors’ Conference in New Delhi on October 8th the Minister of Finance of India P. Chidambaram said that the government is currently examining a report from the Shome Committee on the controversial General Anti-Avoidance Rules (GAAR) which have been debated in the country for over a year, and that the recommendations of the committee could be implement before February 2013.

The Shome Committee was established by the government to examine several changes to the country’s tax legislation for businesses, with a particular emphasis on recommending amendments to previously proposed retrospective tax changes for entities which participate in indirect transfers of asset from India and amendments to the current tax rules for non-resident foreign institutional investors operating in India purely for the purpose of holding portfolio investments.

The Minister explained that finalizing and implementing the recommendations in the report will give more confidence and clarity to foreign businesses looking to operate in India and “…is good for the country, good for the economy and good for investments”.

Photo by World Economic Forum