Finance Minister Pranab Mukherjee today announced deferment of that implementation of the budget proposal the General Anti-Avoidance Rules or GAAR till April 2013. He said this during his opening remarks on the discussion of the Finance Bill 2012 in the Lok Sabha today. Mr. Mukherjee also clarified that the government will remove a provision which puts the onus on the tax payer to prove that there has been no tax avoidance. He said now the onus would be on the tax officials.
The Finance Minister said the implementation of GAAR has been done away with for now to provide more time to both taxpayers and tax administration. It will now apply to income in the financial year 2012-13.
The Finance Minister also announced a roll back of the excise levy on all branded and unbranded jewellery with effect from 17th March this year. He said, the imposition of Central Excise duty at the rate of one per cent had attracted public attention. Mr. Mukherjee said, the levy was well intentioned and introduced not so much for raising revenue as for rationalising the movement towards Goods and Services Tax.
However, the government has decided to withdraw it considering the sentiments of the people both within and outside the House. Mr. Mukherjee said to curb the flow of unaccounted money in the bullion and jewellery trade, the Finance Bill proposes the collection of tax at source (TCS) by the seller at the rate of one per cent of the sale amount from the buyer for all cash transactions exceeding 2 lakh rupees. He said, responding to the representations of the jewellery industry, the threshold limit for tax deduction at source for cash purchases of jewellery would be raised to 5 lakh rupees from the current 2 Lakh rupees.
The Finance Minister said that government has also removed the tax deducted at source on sale of property. It had proposed one per cent tax deduction at source, TDS, on transfer of immovable property other than agriculture land, if the sale value exceeded 50 lakh rupees in urban centres and 20 lakh rupees in other areas. On a provision in the finance bill which seeks to retrospectively clarify the provisions of Income Tax Act relating to capital gain on sale of assets located in India through indirect transfers abroad, the Finance Minister confirmed that clarificatory amendments do not override the provisions of Double Taxation Avoidance Agreement, DTAA which India has with 82 countries.
He said, it would impact those cases where the transaction has been routed through low tax or no tax countries with whom India does not have a DTAA. He also said the retrospective clarificatory amendments now under the consideration of Parliament will not be used to reopen any cases where assessment orders have already been finalised. The Finance Minister said, said the Central Board of Direct Taxes have been asked to issue a circular to clearly state the position after the passage of the finance bill. The Lok Sabha is currently discussing the passage of the Finance Bill.
