Amendments to GAAR, the controversial law against tax avoidance through foreign investments, have been finalised, Finance Minister P Chidambaram disclosed today.
"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 said.
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."
Chidambaram said that government was keen to get the investment engine going and measures were being taken by the government to create a "better climate".
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