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India's Retrospective Tax Dilemma Remains Unsolved

by Mary Swire, Tax-News.com, Hong Kong

14 January 2014


The Indian Government has yet to accept Parthasarathi Shome's recommendations on retrospective taxation, the economic adviser has confirmed.

Shome has played an active role in numerous high profile initiatives launched by the Government in an effort to improve the country's much-criticized tax system. Last year alone, he was asked to chair an expert committee on proposed new general anti-avoidance rule (GAAR) guidance, head a review into the application of India's tax laws and policies, and hold weekly tax advice forums.

Speaking at an event organized by the Calcutta Chamber of Commerce, Shome said that the Government had "accepted most of the recommendations on General Anti-Avoidance Rules suggested by the panel chaired by me. But the Government is yet to accept the issue on retrospective taxation."

He warned that implementing a retrospective, source-based approach to taxation "will send wrong signals to investors and cause uncertainty. It should be in the rarest of rare cases."

Shome also offered an update on plans for a Direct Taxes Code (DTC) and a Goods and Services Tax (GST). He explained that both were "complete," and called for their application from the 2014-15 tax year.

TAGS: compliance | tax | tax compliance | India | tax avoidance | law | enforcement | ministry of finance | tax authority | legislation | tax planning | standards | regulation | penalties | legislation amendments

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