New Delhi, July 13
Prime Minister Manmohan Singh today set up an expert panel to formulate fresh guidelines on the contentious anti-tax avoidance proposal of General Anti-Avoidance Rules (GAAR).

The move underlines the need for broader consultations and clarity. The four-member committee, to be headed by Indian Council for Research on International Economic Relations (ICRIER) chief and taxation expert Parthasarathi Shome, will submit its report by September 30. It will include a road map to be given to the government for the implementation of GAAR. The other members are N Rangachary, former chairman, IRDA, Ajay Shah, professor, NIPFP and Sunil Gupta, joint secretary, tax policy & legislation, Finance Ministry.

The setting up of the expert committee, with experts from outside the Finance Ministry, clearly signals that there is a fresh look being given to the GAAR proposals, cited as important factors for the nervousness of international investors, both FIIs and corporates who are worried about the fallout of cases such as Vodafone.

The Finance Ministry issued draft GAAR guidelines a couple of weeks back for consultations. The Prime Minister’s Office had issued a statement that the PM is yet to clear the norms as he now also holds charge of the Finance portfolio. With the setting up of a new panel, the expectation is that many concerns of markets and corporate will be addressed and thereafter GAAR will be implemented. Prime Minister in his first review meeting of the Finance Ministry had listed restoring investor confidence, both domestic and international, as his top priority.

A PMO statement said the Prime Minister has approved the constitution of an expert committee on GAAR to undertake stakeholder consultations and finalise the guidelines for GAAR.

The introduction of GAAR, which was proposed by then Finance Minister Pranab Mukherjee in the Budget 2012-13 to check tax evasion through tax havens, unnerved foreign investors, as shown by their gradual falling-off in the Indian market. Its implementation was postponed following protests till April next year.

The PMO statement said a need was felt for far more widespread consultations. “There is a need to have greater clarity on many other fronts. With this in view, the Prime Minister has constituted this Expert Committee which will bring transparency and a high degree of technical expertise to the consultation process”, the statement said.