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The implementation
of the controversial General AntiAvoidance Rules (GAAR) appears to be heading
for further delay, beyond the extended deadline of April 1, 2013, with the
general tone of recommendations from the industry to the Parthasarathi Shome
panel pointing out that the new framework should not be introduced at this
juncture.
Finance ministry
officials, in the know of the developments, indicated the underlying message on
GAAR was to go slow, and there was a strong possibility that the Shome
committee would ask for more time to submit the second draft guidelines. The
panel, set up by the prime minister, has to submit final guidelines to the
government by September 30.
One of the leading
industry chambers is slated to point out to the government that the transfer
pricing adjustments in the last few years clearly indicates that income tax
department officials have failed to handle the issues associated with
international transactions, and a majority of the cases were going in favour of
the companies.
The industry, in
this backdrop, wants the administrative machinery to be toned up first before
implementing the critical GAAR framework, which involves highly technical
analysis of cross-border transactions.
The transfer
pricing adjustments jumped from ~1,220 crore in 2004-05 to ~44,531 crore in
2011-12. The number of adjustment cases grew from 239 to 1,343 during this
period.
With the committee
headed by Shome, taxation expert and head of ICRIER (Indian Council for
Research on International Economic Relations) and a former adviser to the
finance minister during P Chidambaram’s tenure between 2004 and 2008, drafting
fresh GAAR guidelines and preparing a roadmap for its implementation, the
industry view is being seen as a critical input in this regard.
Within a fortnight
of the finance ministry putting up the first draft guidelines in the public
domain, the PM in July had approved the constitution of an expert committee on
GAAR to hold consultations with the stakeholders.
As per the
schedule, the committee has to first vet and rework the guidelines based on
feedback and publish the second draft by August 31.
Former finance
minister Pranab Mukherjee had proposed in the Budget for 2012-13 to implement
GAAR in the current financial year as a measure to counter black money.
However, due to the stiff opposition from industry and dampening investor
sentiment, GAAR implementation date was extended by him by one year to April,
2013. PAUSE MODE
The
transfer-pricing record
No of % of
Financial No ofaudits adjustment adjustment Amount Year completed cases cases
(in ~ cr)
