GAAR comedown and FDI comeback: A Sham Revival

The coup de grace of government to countrymen not only ends with awful diesel price hike once again and assailant move of awry cap on cooking gas cylinder but goes further to planned systematic loot through retail FDI to add to the adrenalin and make worse the situation of Aam-admi; already wounded with the adamant and abrupt steps of UPA.http://saurabhnation.blogspot.in/2011/11/tragedy-tale-fdi-in-retail.html

Ignoring the bitter truth and with proven inaction against the CAG revelation of multi trillion crore scam and fraud (Except those unearthed and god knows how many more) with nation, UPA’s alacrity to invite retail giant in India despite the arm-wrestling within allies itself, is genuine to invite aspersions from the mass for the atrocious au Fiat of Indian economy.

In the high time to avow and accept the allegations of corruption and deep rooted fraud in every walk of governance the chastened government seem to be determined to embitter the life of common man by diverting national attention from hanged parliamentary session to hinging on Retail FDI and indecisive price hike on the plea of economic revival .

It’s hard to understand that the govt. step will go ahead to improve economic growth and international grade ratings as said by Mr. Ahluwalia and some other leading businessmen (Read the newspapers today for supportive comments of top industrialists)despite the known fact of failure of retail giant in foreign countries.

Having already existence of certain Specific Anti-avoidance Rules (SAAR) in the IT act namely Section 2 (22)(e),93/94,40 A (2/3),Expln. 3 to Sec 43(1),Clubbing Provision etc ,Finance bill ,2012 proposed insertion of GAAR in the income tax act at par with other countries like Australia,Canada,China ,Singapore, South Africa, New Zealand ,Germany, France ,UK and USA to codify the doctrine of “Substance over form”  for determining the Tax consequences of any transaction ,the real intention of the parties and effect of transactions and purpose of an arrangement to deny the tax benefits of transaction or arrangements which do not have  any commercial substance or consideration other than achieving the tax benefits which constitutes an Impermissible tax avoiding mechanism in the wake of recent famous case of Vodafone & McDowell’s to curb the abuse of India-Mauritius tax treaty.

The expert committee on GAAR (the General Anti-Avoidance Rules) headed by Parthasarathi Shome to address the concerns of foreign and domestic investors, set up by PM MM Singh after he resumed office vacated by Pranab da,has recommended postponement of the controversial tax provision by three years and abolition of capital gains tax on transfer of securities.

In its draft report submitted to the Finance Ministry, which has been put in public domain for a fortnight for comments from stakeholders, the committee advocated that the GAAR provisions should not be invoked to examine the genuineness of the residency of investor entities in Mauritius. 

Roll back of GAAR to attract FDI & FII community, doesn’t seem to be decisive if it is to avoid the consequent Revenue loss through tax avoidance mechanism (Impermissible avoidance arrangements-IAA) as 42 % of FDI in India comes through Mauritius route itself.

If government really wants growth and development of country then why not they move to take quick action to bring back Black money stashed outside the country and disclose name of culprits instead of taking quick decisions of inviting FDI and in fact after bringing back the black money would there be any need more for FDI or the real culprits of government bringing black money through FDI mode?