Finance ministry officials today met foreign institutional investors (FIIs) and assured them that their concerns regarding the proposed general anti-avoidance rules (GAAR) would be addressed once the rules for the same are framed.
According to sources,the FIIs expressed concerns over litigations that may arise because of the application of GAAR by the department. Further,the FIIs also raised the issue of treaty over ride once GAAR is implemented. GAAR provides for overriding double taxation avoidance treaties with various countries.
The meeting was held by the committee framing rules for GAAR and was attended by representatives of FIIs including JP Morgan,CLSA,Morgan Stanley,Goldman Sachs and Credit Suisse among others.
In the Budget 2012-13,finance minister Pranab Mukherjee proposed GAAR to put an end to treaty shopping and round tripping by companies. FIIs wanted clarification on permissible activities which will remain out of the purview of the GAAR.