General Anti Avoidance Rule (GAAR) – current affair 2017Anisha Mukhija
GAAR will be effective from April 1,2017
The Union Finance Ministry has announced that the General Anti Avoidance Rule (GAAR) will be effective from the 1 April, 2017. In this regard Income Tax (IT) department has issued a slew of clarifications on implementation of GAAR, seeking to address concerns of foreign investors over implementation of the anti-evasion measure. GAAR seeks to prevent companies from routing transactions through other countries to avoid taxes. The rules are framed mainly to minimize and check avoidance of tax. India will be the 17th nation in the world to have laws that aim to close tax loopholes. At present, GAAR is in force in nations like Australia, Singapore, China and the UK.
GAAR seeks to give the IT department powers to scrutinize transactions structured in such a way as to deliberately avoid paying tax in India. It will not be invoked in cases where investments are routed through tax treaties that have a sufficient limitation of benefit (LOB) clause to address tax avoidance.
It should be noted that LOB clause in tax treaties generally requires investors to meet certain spending and employment criteria to avail the benefits of the treaty. All transactions or arrangements approved by courts and quasi-judicial authorities like the authority for advance ruling and that specifically address the issue of tax avoidance will not be subject to the GAAR test.
GAAR will not be applicable on compulsorily convertible instruments, bonus issuances or split/consolidation of holdings in respect of investments made prior to 1 April 2017 in the hands of the same investor. In order to prevent misuse of GAAR provisions by the IT department, adequate safeguards also have been put in place based on which GAAR will be invoked.
The proposal to apply GAAR first will be vetted by an officer at the level of the principal commissioner or commissioner of income tax and at the second stage by an approving panel headed by a high court judge.
Indian Navy’s Theatre Level Exercise TROPEX 17
The Indian Navy’s Annual Theatre Readiness Operational Exercise (TROPEX) 2017 is being conducted off the Western Seaboard. The month long exercise will see participation of ships and aircraft of both the Western and Eastern Naval Command and also assets from the Indian Air Force, Indian Army and the Indian Coast Guard.
TROPEX 17 exercise is aimed at testing combat readiness of the combined fleets of the Indian Navy, and the assets of the Indian Army, Indian Air Force and Indian Coast Guard. It seeks to strengthen inter-operability and joint operations in a complex environment.
It assumes special significance in the backdrop of the current security scenario. TROPEX 17 exercise will be conducted in various phases, both in harbour and at sea encompassing the various facets of war-fighting and combat operations.
It will see participation of major surface combatants and air assets of the Indian Navy including the aircraft carrier Vikramaditya, nuclear submarine Chakra, Landing Platform Dock (LPD) Jalashwa. It will also see participation of recently commissioned destroyer Chennai, the P-8I long range maritime reconnaissance and anti-submarine warfare aircraft.