As the government seemed determined to go ahead with the controversial GAAR, BJP has said adequate safeguards needed to be put in place with regard to the new tax provision which has already created a scare among the foreign investors.
BJP leader Yashwant Sinha alleged that the government had mishandled the GAAR (General Anti-Avoidance Rules), a measure to check tax evasion, which was proposed in the General Budget 2012-13 but was deferred till April next year in the wake of outrage by foreign investors.
Sinha, who heads the Parliamentary Standing Committee on Finance, said his panel had suggested a number of safeguards including making application of GAAR with prospective effect so that the existing agreements are not affected.
"We have mentioned a number of safeguards which must be put in place before you implement GAAR. So, basically I am not opposed to GAAR. But with a number of safeguards which the committee has pointed out, including the accountability of the tax administration," Sinha told PTI.
He alleged that GAAR, in its present form, was a "scary" provision for foreign investors like the retrospective amendment to tax laws and had the potential of pushing away the foreign investors.
The Standing Committee in its recommendations on the Direct Taxes Code (DTC) Bill submitted on March 9 to Parliament had highlighted the concerns among the investors over GAAR and underlined the need for steps to address these.
It had made a slew of recommendations to simplify the proposed rules.
"Uncertainties with regard to applicability of tax treaty provisions should be removed so that India's credibility as a reliable treaty partner is not affected," it had underlined.