Chidambaram says GAAR amendments have been finalised and the draft will be placed before the PMO.
New Delhi : Amendments to GAAR, the controversial law against tax avoidance through foreign investments, have been finalised, Finance Minister P Chidambaram disclosed on Sunday. “I have finalised the amendments to the Chapter 10A of the Income Tax Act. Now it will go to the PMO and then we should be ready with the amendments and then the GAAR rules will reflect the amended Chapter 10A.
“That is under preparation and I think the work is almost complete. The drafting work is complete. So, GAAR is under control. I have taken the decisions, subject to Prime Minister’s approval and then Cabinet,” he told PTI in an interview.
Chapter 10A of the Income Tax Act deals with taxation of investments.
GAAR (General Anti-Avoidance Rules), which was proposed in 2012-13 budget with a view to preventing tax evasion, evoked sharp reactions from foreign as well as domestic investors who feared that unbridled powers to taxmen would result in harassment of investors.
The government later appointed a committee headed by tax expert Parthasarthi Shome to look into their concerns.
Chidambaram, during the interview, spoke on a variety of subjects including his optimism on meeting disinvestment and spectrum sales target, confidence on pushing through with reforms measures and the relationship with RBI which he said was not antagonistic.
On the issue relating to retrospective tax amendment on which the Shome Committee had submitted its report, he said: “The CBDT has given its views. I have taken decisions at my level. The drafting is going on. Again it will go to the PMO and then to the Cabinet.” Referring to the Direct Taxes Code (DTC), a bigger matter, he said, “We have now started work. This morning I spent two hours on that. Earlier I had spent several hours. We are looking at it. We have tabulated it…will take final decision.”
PSUs surplus cash: Use it or lose it
Optimistic that the economy will still clock 5.5 to 6 per cent growth in the current fiscal, he said public sector undertakings have been put on notice to invest their surplus or be prepared to lose it while industrial houses will be “goaded” to invest.
“Today there is reluctance to invest because they (industry) perceive a number of hurdles to investment. They also don’t see the economic situation very propitious or conducive for investment. “I think some steps we took in September have broken this wave of fear but some part of it is still there. We have to now get down to the detail, get each PSU, each sector, each business house why are you not investing. Invest. That is the effort,” he said.
Chidambaram said no PSU will be allowed to fall short of its announced intention to invest. “And now we are talking to individual business houses and goading them to invest. They are all sitting on piles of cash. We are also asking sectorally what is the hindrance to investment and trying to remove those hindrances or hurdles. But will have to get the investment engine going.
Chidambaram said some industries like automobile and housing have perked up a bit but it was not so in the consumer durable and non-durable sectors.
On problems facing the power sector, Chidambaram said re-starting power plants which are stranded due to want of fuel is the need of the hour. “The urgent part is that the stranded power plants must be allowed to or (we) have to find a way to produce power,” he told PTI. Quoting reports, he said 8,000 MW capacity is stranded for want of gas and 12,000 MW capacity for want of coal. “If you can get this 20,000 MW up and running, it equals to one year’s target,” Chidambaram said.
Moily to decide on LPG subsidy cap
“(Supply of) six (subsidised) cylinders (per household in a year) was decided by the Cabinet based on the proposal that came from the Ministry of Petroleum and Natural Gas. (Now it is) for them to rework it, if they feel it needs to be reworked,” he told PTI in an interview.
Even the new Oil Minister M Veerappa Moily had earlier this month admitted that the decision, taken during term of his predecessor S Jaipal Reddy, had caused hardships. — PTI