New Delhi: The Lower House of India's Parliament, Lok Sabha, Tuesday passed the Finance Bill 2012-13 with several amendments to the Union Budget proposals, primarily including delay in implementation of the contentious General Anti-Avoidance Rules (GAAR) by a year to April 1, 2013.
The government, in the Union Budget 2012-13, had proposed GAAR to come into effect from April 1, 2012, drawing sharp criticisms from both domestic and foreign investors over the uncertainty of the law.
Earlier Monday, opening discussion on the Finance Bill, Finance Minister Pranab Mukherjee also proposed amendments to the rule, saying that the burden of proving tax evasion will lie with the tax authorities rather than on the tax-payer, helping markets recover although they erased gains on Tuesday.
Moreover, classificatory amendments made in GAAR will not override the provisions made under the Double Taxation Avoidance Agreement (DTAA) which India has signed with 82 countries, including Mauritius, Mukherjee said.
The other big-ticket amendment to the Budgetary proposals was roll back of 1% excise duty on unbranded jewelery and the 1% already imposed on branded jewelery.
Notably, the proposal had created a furore among jewelers across India who went on a 21-day strike that is said to have resulted in a loss of about Rs 220 billion in sales.
Besides, Mukherjee announced that the Reserve Bank of India is working on schemes for subsidiarization of Indian branches of foreign banks. The move will allow these banks to operate as independent business entities and protect Indian capital and operations from external economic shocks.