Post-8216;row8217;,panel to 8216;modify8217; GAAR norms

8220;The GAAR committee met today and discussed the examples given in the draft guidelines8230; some examples will be reduced,some will be combined8221;,said a senior Finance Ministry official after the meeting.

The draft guidelines has provided 21 examples to illustrate the applicability and non-applicability of the GAAR,which was proposed by former Finance Minister Pranab Mukherjee to check tax evasion by foreign investors.

The provisions,however,invoked sharp criticism from the foreign and domestic investors,following which the government decided to postpone its implementation by one year to April 2013. The Ministry had also constituted a committee to look into the concerns of investors.

The Committee last month came out with draft guidelines on GAAR to seek comments from various stakeholders.

Among other things,the draft norms provide for a threshold limit for invocation of GAAR. It also clarified that the norms would apply to income accruing only after April 1,2013.

The draft guidelines,however,got caught in a controversy following a release by PMO which said the Prime Minister had yet to see them.

8220;These draft guidelines have not been seen by the Prime Minister and will be finalised with the approval of the Prime Minister,who holds the Finance portfolio,only after considering the feedback received,8221; the PMO had said in a release barely 12 hours after the draft norms were released by the Finance Ministry on June 28.

PMO and finance ministry caught in row over GAAR guidelines

ENS Prime Minister Manmohan Singhs efforts to extend the healing touch to the economy seems to have run into some turbulence at the finance ministry the new ministry under his charge. The apparent discord between the finance ministry and PMs Office on the tax rules for general anti-avoidance or GAAR came to the fore with contrasting views emanating from both quarters within a span of just over 24 hours.

On Thursday,after a meeting with the PMs principal secretary Pulok Chatterjee in the afternoon,Finance Secretary R S Gujral announced that the draft guidelines for GAAR would be announced during the day. Late at night,the finance ministry hastily put the draft guidelines on the Press Information Bureaus website,and invited public comments.

But early this morning,the Prime Ministers Office PMO issued a clarification stating that the GAAR guidelines have not been seen by the Prime Minister and will be finalised with the approval of the Prime Minister,who holds the finance portfolio,only after considering the feedback received.

The PMO said the guidelines put up on the website are from the official level of the finance ministry8230; are only draft guidelines and have been put out for receiving wide-ranging feedback and for discussion purposes only.

In another twist on Friday afternoon,the Central Board of Direct Taxes reiterated that the GAAR provisions would be applicable only from April 1,2013 and sought comments from stakeholders.

When contacted,Gujral said: Dont read too much into the release by the PMO.

All this comes at a time when Singh has categorically told finance ministry officials that there are problems on the tax front which need to be addressed.