The market has rejoiced as GAAR has been postponed to to 2016 instead of 2014. The main aim of this statement of Finance Ministry is to ride on a good wave of India shining during the forthcoming elections in 2014 as FIIS can now without fear can pump the money in our country without worrying for the taxation laws. Now route through Mauritius for investments has been left wide open as Investors entering via FII route need not worry as Govt has kept quite glaring loopholes to allow black money to re-enter India via dubious routes of Mauritius as an FII as this type of investors will not have to deal with GAAR.
An important landmark decision is that pre-2010 deals are safe as GAAR cannot be applied retrospectively for deals done prior to Aug 2010. This was the time when GAAR was introduced in India.
Press Information bureau have published the salient aspects of GAAR and same is enumerated below:-
The Central Government has carefully considered the report of the Expert Committee on General Anti Avoidance Rules (GAAR) and accepted the major recommendations of the Expert Committee with some modifications. This was announced by the Union Finance Minstar Shri P.Chidambaram here today in a press conference. The Finance Minister said that the following decisions have been taken by Government in this regard:
(i) An arrangement, the main purpose of which is to obtain a tax benefit, would be considered as an impermissible avoidance arrangement. The current provision prescribing that it should be “the main purpose or one of the main purposes” will be amended accordingly.
(ii) The assessing officer will be required to issue a show cause notice,containing reasons, to the assessee before invoking the provisions of Chapter X-A.
(iii) The assessee shall have an opportunity to prove that the arrangement is not an impermissible avoidance arrangement.
(iv) The two separate definitions in the current provisions, namely, ‘associated person’ and ‘connected person’ will be combined and there will be only one inclusive provision defining a ‘connected person’.
(v) The Approving Panel shall consist of a Chairperson who is or has been a Judge of a High Court; one Member of the Indian Revenue Service not below the rank of Chief Commissioner of Income-tax; and one Member who shall be an academic or scholar having special knowledge of matters such as direct taxes, business accounts and international trade practices. The current provision that the Approving Panel shall consist of not less than three members being Income-tax authorities or officers of the Indian Legal Service will be substituted.
(vi) The Approving Panel may have regard to the period or time for which the arrangement had existed; the fact of payment of taxes by the assessee; and the fact that an exit route was provided by the arrangement. Such factors may be relevant but not sufficient to determine whether the arrangement is an impermissible avoidance arrangement.
(vii) The directions issued by the Approving Panel shall be binding on the assessee as well as the Income-tax authorities. The current provision that it shall be binding only on the Income-tax authorities will be modified accordingly.
(viii) While determining whether an arrangement is an impermissible avoidance arrangement, it will be ensured that the same income is not taxed twice in the hands of the same tax payer in the same year or in different assessment years.
(ix) Investments made before August 30, 2010, the date of introduction of the Direct Taxes Code, Bill, 2010, will be grandfathered.
(x) GAAR will not apply to such FIIs that choose not to take any benefit under an agreement under section 90 or section 90A of the Income-tax Act, 1961. GAAR will also not apply to non-resident investors in FIIs.
(xi) A monetary threshold of Rs. 3 crore of tax benefit in the arrangement will be provided in order to attract the provisions of GAAR.
(xii) Where a part of the arrangement is an impermissible avoidance arrangement, GAAR will be restricted to the tax consequence of that part which is impermissible and not to the whole arrangement.
(xiii) Where GAAR and SAAR are both in force, only one of them will apply to a given case, and guidelines will be made regarding the applicability of one or the other.
(xiv) Statutory forms will be prescribed for the different authorities to exercise their powers under section 144BA.
(xv) Time limits will be provided for action by the various authorities under GAAR.
(xvi) Section 245N(a)(iv) that provides for an advance ruling by the Authority for Advance Rulings (AAR) whether an arrangement is an impermissible avoidance arrangement will be retained and the administration of the AAR will be strengthened.
(xvii) The tax auditor will be required to report any tax avoidance arrangement.
Further, having considered all the circumstances and relevant factors, the Government has also decided that the provisions of Chapter X-A will come into force with effect from April 1, 2016 (as against the current provision of April 1, 2014).
A number of countries have provided for General Anti Avoidance Rules (GAAR) in matters relating to taxation. While tax mitigationis recognized, tax avoidance is frowned upon. International literature describes tax avoidance as the legal exploitation of tax laws to one’s own advantage and an arrangement entered into solely or primarily for the purpose of obtaining a tax advantage.
The principle of GAAR was incorporated in the Direct Taxes Code which was introduced as a Bill in Parliament on August 30, 2010.
Pending consideration of the Bill, the Income-tax Act, 1961 was amended by Finance Bill, 2012 to add Chapter X-A titled ‘General Anti- Avoidance Rule’. It became part of the law when the Finance Bill was passed by Parliament. Draft GAAR guidelines were also published. Under the current provisions, Chapter X-A would come into force with effect from April 1, 2014.
A number of representations were received against the provisions contained in Chapter X-A. Hence, on July 13, 2012, the Prime Minister approved the constitution of an Expert Committee on GAAR to undertake stakeholder consultations and finalize the guidelines for GAAR. Accordingly, an Expert Committee consisting of Dr. Parthasarathi Shome and three others was constituted on July 17, 2012 with broad terms of reference including consultation with stakeholders and finalizing the GAAR guidelines and a roadmap for implementation.
The Expert Committee submitted its draft report on August 31, 2012 which was placed in the public domain on September 1, 2012. After examining the responses to the draft, the Expert Committee submitted its final report on September 30, 2012.
The final report of the Expert Committee has been now put on the website of the Ministry of Finance i.e. finmin(dot)nic(dot)in.
Verdict
We sincerely hope that whatever decision Govt of India has taken works in the favour of our nation as we feel that country comes first always and every time whereas same may not be said about politics prevailing in our country where at times personal goals comes before the nation. The market is optimistic that it will keep on getting the money being invested in the market and bullish trajectory will continue but as a nation we have to rise above the petty gains and let us all together make India a force to reckon with and people talk about our nation as a developed country and not as a developing country.
The value and price of silver varies depending on various factors. Some of these factors are: A primary factor affecting the price of silver is the available supply versus fabrication demand. In recent years, fabrication demand has greatly outpaced mine production forcing market participants to draw down existing stocks to meet demand. As these available sources continue to decline, silver's fundamentals continue to strengthen. However, since silver is a tangible asset, and is recognized as a store of value, its price can also be affected by changes in things such as inflation (real or perceived), changing values of paper currencies, and fluctuations in deficits and interest rates. 
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