Final GAAR report by end of the month: Parthasarathi Shome panel

MUMBAI: The Parthasarathi Shome panel, which is looking into the taxation issues relating to Gaar ( general anti-avoidance rules), is likely to submit its final report by end of the month.

"We are looking into the issue of 'indirect transfer of Indian assets now and hopeful of submitting the report relating to it by end of the month," chairman of expert committee on Gaar Parthasarathi Shome told reporters here.

Indirect transfer of shares where the underlying asset is Indian has become a contentious issue in the recent past especially with the government demanding $2.2-billion tax from Vodafone for its purchase of Hutch in 2007.

Shome was asked to look into the issues related to Garr by the Prime Minister on July 17.

While some tax experts are of the opinion that any transfer of shares where underlying asset is in India should be taxable, there are others who think that this would come in the way of foreign investments.

In this context, the scope of Shome panel has also been expanded recently to examine the issue of taxation of non-resident transfer of assets where the underlying asset is in India along with the previous mandate of looking into FIIs ( foreign institutional investors) working in this space.

In the Finance Act of 2012, the government made amendments to bring indirect transfer of shares, where the underlying asset is in India, under the purview of taxation with retrospective effect.

With this amendment, deals like the Vodafone came under the purview of taxation and subsequently raised doubts about steadfastness of domestic tax laws.

However, the draft report submitted by the Shome committee with regard to Gaar proposed to defer implementation of this controversial tax law with abolition of capital gains tax on transfer of securities to ensure investment and capital flows.