Govt. proposes to defer applicability of GAAR by two years

Union Finance Minister Arun Jaitley on Saturday proposed to defer the applicability of the General Anti Avoidance Rule (GAAR) by two years.

Investments made up to 31.03.2017 shall not be subjected to GAAR.

Jaitley proposed pass-through status to all sub-categories of Category I as well as Category II of Alternative Investment Funds (AIF) governed by regulations of Securities Exchange Board of India (SEBI) to streamline the taxation regime of AIFs.

He also proposed to modify the Permanent Establishment norms to facilitate relocation of fund managers of off-shore funds in India.

The Finance Minister proposed an additional investment allowance of 15 percent and additional depreciation of 15 percent to new manufacturing units set up in notified areas of Andhra Pradesh and Telangana from April 1, 2015 to March 31, 2020.

With respect to the Real Estate Investment Trusts (REITs) and Infrastructure Investment Trusts (INViTs), he proposed that the treatment granted to the sponsor on offloading of units at the time of listing will be the same as that granted if the shareholding of the Special Purpose Vehicle (SPV) had been offloaded at the stage of direct listing.

The Finance Minister said that rental income from real estate assets directly held by REITs are proposed to be allowed to pass through and taxed in the hands of the unit holders of the REIT.

Arun Jaitley proposed to amend Section 194LD of the Income Tax Act to extend the period of applicability of reduced rate of tax at five percent for income of foreign investors including FIIs and QFIs from corporate bonds and government securities. The period of applicability is proposed to be extended from May 31, 2015 to June 30, 2017.

Seeking to address the problems faced by small companies and to facilitate the inflow of technology, the Finance Minister proposed to amend Section 115 of the Income Tax Act thereby reducing the rate of tax on royalty and fees for technical services from 25 percent to 10 percent

To facilitate the generation of employment, Jaitley proposed that the tax benefit under section 80JJAA of the Income Tax Act will be available to a 'person' deriving profits from manufacture of goods in a factory and paying wages to new regular workmen. The amendment seeks to reduce the eligibility threshold from minimum 100 workmen to 50 workmen.