GAAR defered by one year, Pranab

After continued pressure, the General Anti-Avoidance Rules (GAAR) has finally been announced to be deferred for one year. The announcement was made by the Finance Minister Pranab Mukherjee on Monday.

He said that the jewelry industry will be provided relief from GAAR for the next one year but at the same time mentioned that no concession will be given to Vodafone in case of their tax dispute. Submitting the Finance Bill of 2012 to the parliament, Pranab said that the capital gains tax has been slashed to half bringing it down to 10% instead of 20% and the rules and regulations for the arrest of violating Customs Act have also been relaxed to a certain extend.

He said, “The government has decided to withdraw the levy [one per cent excise duty] on all precious metal jewellery, branded or unbranded, with effect from March 17, 2012.”

He further explained that the tax collection at source in case of jewelry will be increased to Rs. 5 lac from that of Rs. 2 lac. This is applied to all cash purchases. However, bullion is kept out of this increase in the tax. Speaking on GAAR, Pranab said, “to provide more time to both tax payers and tax administration to address all issues, I propose to defer the applicability of the GAAR provisions by one year, will now apply to income of financial year 2013-14 and subsequent years.”

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