PM expands terms of reference of GAAR panel

Prime Minister Manmohan Singh on Monday expanded the terms of reference of the GAAR committee by referring the issues relating to taxation of FIIs and portfolio investors to it with a view to provide greater clarity to them.

"It is necessary to have clarity on the tax liability of portfolio investors and Foreign Institutional Investors (FIIs) as a result of this amendment (relating to GAAR), particularly, when the investment is made through a registered stock exchange in accordance with SEBI guidelines and purely in the form of portfolio investment," the PMO said in a statement.

Any clarification needs to be harmonised with the General Anti-Avoidance Rules (GAAR) guidelines and will have to address any residual concerns outside of GAAR, it said while making additional reference to the Committee.

Earlier this month, the Prime Minister had set-up a panel headed by ICRIER chief and taxation expert Parthasarathi Shome to bring "greater clarity" and prepare a roadmap for GAAR by September 30 for its implementation.

The statement further said there is an additional issue relating to the taxation of portfolio investment, particularly in the context of the amendment made to the Income Tax Act relating to the taxation of non-resident transfer of assets where the underlying asset is in India.

Therefore, "the Prime Minister has decided to refer the issue of the implications of this amendment on FIIs and portfolio investors to the Expert Committee on GAAR".