PRESS INFORMATION BUREAU GOVERNMENT OF INDIA

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MAJOR RECOMMENDATIONS OF EXPERT COMMITTEE ON GAAR ACCEPTED

New Delhi, Pausa 24, 1934

January 14, 2013

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 Minister 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