Applicability of GAAR put off by two years

New Delhi, February 28

In an move to further improve investment sentiment in the country, Finance Minister Arun Jaitley today proposed deferring applicability of 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. 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 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 it (GAAR) is proposed to be applicable for income of the financial year 2017-18 (AY 2018-19) and subsequent years. “It is also proposed that the investments made up to March 31, 2017, shall not be subjected to GAAR,” Jaitley said. — PTI