New Delhi: Assuring foreign institutional investors (FIIs) that their concerns on taxation of short-term capital gains will be taken on board, the government on Wednesday said clarifications will be issued on the anti-tax avoidance rules, GAAR, once the Finance Bill is approved by Parliament.
"We have clarified verbally our intention. Obviously rules will come (after) the Finance Bill 2012 is passed. Our people are working on the rules. So there won't be any delay after the passage of Finance Bill," Finance Secretary R S Gujral told reporters after a meeting with FIIs.
Gujral gave this assurance to the FIIs at a meeting which was attended by representatives of JP Morgan, CLSA, Morgan Stanley, Goldman Sachs and Credit Suisse among others. CBDT Chairman Laxman Das was also present.
The FIIs, according to sources, have expressed concerns over the applicability of the General Anti-Avoidance Rules (GAAR) proposed by Finance Minister Pranab Mukherjee in his Budget.
FIIs wanted clarification on permissible activities which will remain out of the purview of the GAAR. They also pointed out that certain aspects of the proposed law were vague and would give discretionary powers to the income tax officials.
"We told them (FIIs) that we will take those points on board and try and clear them...," Gujral said, adding that the main concern of FIIs relate with short capital gain on equity trading.
"If they are permissible, clearly they are governed by the particular (double taxation avoidance) treaty and GAAR does not get invoked at all. If it is an impermissible arrangement, then yes... GAAR gets invoked and then treaty does not help them," Gujral added.