General Anti-Avoidance Rules expected to be modified: Pranab Mukherjee

NEW DELHI: Union Finance Minister Mr Pranab Mukherjee is expected to bring changes in few provisions of the General Anti-Avoidance Rules (GAAR) prescribed during this year's Union Budget. It is expected that Centre could be soft on the issue of taxing short-term capital gains of Mauritius-based foreign institutional investors (FIIs).

Centre is not planning to target participatory note (PN) trades. But, it is likely that uncertainty will continue until an amendment is passed to exclude PNs.

Indian government did not take account of participatory notes when it unveiled a provision in the budget that makes it clear that deals involving Indian assets, like Vodafone's buyout of Hutchison Essar, will be subject to tax if the transactions get struck due to any reason.

While answering to a general discussion on the budget in Lok Sabha, Mr Mukherjee has defended his recommendations that they were only aimed at tax evaders who took advantage of low or zero-tax nations and not genuine investors. He also said that it would be review if the requirement comes up.

Mr Mukherjee also said that GAAR is a significant tool for countering the problem of black money.