Budget 2015: FM defers GAAR by two years to woo foreign inivestors

Finance minister Arun jaitley today said that the government proposes to defer the General Anti-Avoidance Rules (GAAR), a controversial law brought in by the erstwhile United Progressive Alliance government, that resulted in much heartburn among foreign investors. The rules were about to be applicable from April 2015.Framed to rein in tax avoidance, the rules would have taxed foreign funds and companies that routed investments through tax havens.[caption id="attachment_2127749" align="alignleft" width="380"] FM said the decision was aimed at accelerating the changing mood of investors towards India[/caption]"Implementation of the General Anti Avoidance Rule (GAAR) has been a matter of public debate. The investment sentiment in the country has now turned positive and we need to accelerate this momentum," the finance minister has said in the speech."There are also certain contentious issues relating to GAAR which need to be resolved. It has therefore been decided to defer the applicability of GAAR by two years," he said.The rules will now apply prospectively to investments made on or after 1 April 2017, the minister said.It was present president Pranab Mukherjee, who was finance minister in the earlier part of the UPA regime, who introduced the GAAR in his Budget for 2012-13.