Government changes foreign investor norms

Prime Minister Narendra Modi's government has yet to adopt a view on proposed rules to tighten policy on tax avoidance by foreign investors, a senior finance ministry official said on Monday.

The general anti-avoidance rules (GAAR) announced by the previous government had sparked alarm among foreign investors because of provisions that included tightening rules on investments from countries that have double taxation treaties with India.

There was no mention of the proposal in the budget unveiled by Finance Minister Arun Jaitley last week, but Nirmala Sitharaman, minister of state for finance, told parliament on Friday that the rules would be implemented from 2015.

Investors have been hoping the Modi government would change the GAAR rules or scrap them altogether.

"It is a fact that the new government is yet to take a view on the whole matter," Shaktikanta Das, Revenue Secretary at the Ministry of Finance, said at an information event organised by the Confederation of Indian Industry.

Das added the new government would look into concerns with respect to GAAR.

The government last week unveiled its first budget that seeks to revive growth and curb borrowing, but left open questions on how it will reduce the fiscal deficit and how some of the announced measures will be implemented.



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