Amendments to GAAR finalised, says Chidambaram

Amendments to the General Anti-Avoidance Rules, or GAAR, the controversial law against tax avoidance through foreign investments, have been finalised, Union finance minister P Chidambaram disclosed on Sunday in an interview.

"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.

GAAR, 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.

On the issue of retrospective tax amendment on which 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, a bigger matter, he said, "We have now started work. This morning I spent two hours on that. Earlier, I spent several hours. We are looking at it. We have tabulated it...will take final decision."

Cabinet to take up NIB proposal soon

Chidambaram indicated that the proposal to set up the National Investment Board (NIB) for expediting clearance to large projects will soon come up for approval before the Cabinet. "The Cabinet Note is with the Cabinet Secretariat and the Prime Minister's Office. It will be listed before the Cabinet at a time when the PM decides it should be listed. But I saw in some newspapers ... that it is likely to be listed," he said.

'Reserve Bank, govt not antagonistic'

"The equation between the government and the central bank in India is the same as the equation between the government and the central bank of any country. It is always arguing for growth on the part of government and arguing for stability and taming inflation on the part of the central bank," he said.

Even as the government makes out a case for the central bank to support growth, it doesn't mean "they (the finance ministry and the RBI) are antagonistic to each other", he said.

"What we are trying to do is to argue our case, argue the case for growth, argue the case for taming inflation and then of course whatever the judgement is arrived at...," the minister added.

To PSUs: Invest or lose surplus cash

"We have already put (PSUs) on notice, no one will be allowed to fall short of (the) announced intention to invest... If they have not invested and they still have surplus cash, they have been told to invest...the principle is use it or lose it," he said. At the beginning of the financial year, each central PSUs had committed to invest certain amount.

Chidambaram said the performance of CMDs will be measured, among other things, on how much their company has invested in terms of the declared intention. He said the performance of PSUs on investment front will be reviewed in January.

On aviation FDI

Government may be open to tweaking FDI norms in the aviation sector to attract investment, for which there has to be "willing buyer and a willing seller", he said.

"What is there to tweak, we have allowed 49 per cent. Let us see whether there are potential investors. These are executive decisions, they can always be tweaked," he said.

"Merely because you raise it to 51 per cent does not mean somebody is going to come. There may be a willing buyer, there has to be a willing seller also. The Indian company must be willing to yield control. And (there is) no evidence of that. There are only half a dozen players in the sector," Chidambaram said.

'Coal scam figure will be mythical'

After terming CAG's estimate of Rs 1.76 lakh crore loss in 2G spectrum allocation as a "myth", Chidambaram said the estimated Rs 1.86 lakh crore loss in coal blocks allocation would also turn out to be a "mythical" and "fancy" number. "One business house told me that they were allotted a coal block some seven-eight years ago. (But) he has not been able to enter that area yet for a variety of reasons. Now what's the point in saying that some loss is there. What is the loss?," he asked.

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