The recommendations by the Shome Committee on the General Anti-Avoidance Regulation (GAAR), if accepted, are bound to clear the doubts that impede foreign investment in India. The government also needs to address other important issues that are a hindrance in the path of foreign investors. The Minimum Alternate Tax (MAT) on special economic zones (SEZs) introduced in the 2011 Budget has put off potential investors. MAT, effectively, nullifies all tax benefits and concessions that were earlier promised to foreign investors for investing in SEZs. This puts their projects based on the earlier tax benefits and exemptions in jeopardy and also deters them from investing in India. Globally, it projects India as a not-so-dependable investment destination with an unstable tax regime.
Sushant Sharma Gurgaon
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