Finance Minister Pranab Mukherjee said in the parliament on Monday that the general anti-avoidance rule (GAAR) will be implemented from next financial year instead of this fiscal year.
The earlier proposal was for an April 2012 rollout for GAAR. However, the Standing Committee has recommended that the GAAR be implemented, along with the Direct Tax Code (DTC), in April 2013.
Mukherjee also told parliament that the burden of proving tax evasion under GAAR will lie with the authorities rather than with overseas investors.
The stock market and the rupee recovered following the announcement by the Finance Minister. It may be recalled that FII flows turned negative in April after the Finance Minister proposed to introduce GAAR in Budget 2012-13.
Mukherjee also told the Lok Sabha today that the proposed retrospective amendment of income tax laws will not override tax break treaties with countries such as Mauritius. Clarificatory provisions don't override tax treaties, Mukherjee said.
He said that the threshold limit for TCS (tax collection at source) on cash purchase of jewellery will be raised to Rs 5 lakh from the present Rs 2 lakh.
However, the Finance Minister said that the threshold limit for cash purchase on bullion will be retained at Rs 2 lakh. Bullion will not include any coin or other article weighing 10 gm or less, he added, setting the tone for the debate on the crucial bill.
He also removed the levy of 0.3% excise duty on branded and unbranded jewellery.
However, the Finance Minister did not roll back the doubling of the import duty on gold to 4% of value.
Long-term capital gains tax rate for non-resident investors (NRIs) and private equity firms (PE) reduced to 10% from 20%.
The Government will also exempt long-term capital gains on the sale of unlisted securities in initial public offerings (IPO) from tax.
Mukherjee also proposed to levy a 0.2% security transaction tax (STT) on the sale of unlisted securities.
The Finance Minister also extended the lower rate of withholding tax to all businesses.
He also announced withdrawal of TDS on immovable property as proposed in Budget.
Mukherjee also announced the withdrawal of provisions in Customs and Excise rules under which bail was denied till public prosecutor was heard.
Mukherjee proposed the changes in indirect taxes to the union budget proposals announced on March 16.
GAAR to divert foreign investments from India to other emerging markets: ASSOCHAM