The finance minister P Chidambaram, realizing that there is reluctance to invest among investors, said that the ministry has finalized the amendments to the controversial proposal and it was ready to go to the Prime Minister's Office (PMO).
"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," Chidambaram told a media.
GAAR, which had evoked sharp criticism from domestic and foreign investors for its capability to hurt India's growth by blocking investments, will be a crucial step towards restoring investors' confidence in Asia's third largest economy which has been struggling with widening trade deficit, and a falling rupee and stocks.
The Shomepanel, the expert committee on General Anti Avoidance Rules (GAAR) headed by Parthasarathi Shome, has already submitted its final report to the government last month and had provided a shirt-term relief to the investors by suggesting postponement of the controversial tax provision by three years till 2016-17 along with abolition of capital gains tax on transfer of securities.
The expert panel on GAAR had also recommended provisions should not be invoked to examine the genuineness of the foreign investor entities' residency in the island nation.
Aimed at penalizing the tax evaders, by either discouraging Indian companies and investors from "round-tripping", or by stopping investors from routing investments through Mauritius and other tax havens, GAAR would be crucial to government's fiscal deficit and GDP growth plans.