In an move to further improve investment sentiment in the country, Finance Minister Arun Jaitley today proposed deferring General Anti-Avoidance Act (GAAR) by two years.
"There are also certain contentious issues relating to GAAR which need to be resolved. It has therefore been decided to defer the applicability of GAAR by two years..
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"Further, it has also been decided that when implemented, GAAR would apply prospectively to investments made on or after April 1, 2017," Jaitley said while presenting the 2015-16 Budget.
Implementation of the GAAR has been a matter of public debate.
The government had earlier proposed imposing the GAAR from April 1, 2015, for those claiming tax benefit of over Rs 3 crore. The rules are aimed at minimising tax avoidance for investments made by entities based in tax havens.
Jaitley said GAAR is proposed to be applicable for income of the financial year 2017-18 (A.Y. 2018-19) and subsequent years.
"It is also proposed that the investments made upto March 31, 2017 shall not be subjected to GAAR," the Finance Minister said.