|Consider the following recommendations given by Parthasarathi Shome Panel related to General Anti Avoidance Rules (GAAR).|
|1. To abolish the capital gains tax on transfer of listed securities and appropriately to increase the|
|Securities transaction tax rate.|
|2. To permit corporates to approach the authority for advanced rulings for tax guidance.|
|3. Using General Anti Avoidance Rules (GAAR) only in cases of abusive, contrived and artificial arrangements.|
|4. It asked Government of India to not to use General Anti Avoidance Rules (GAAR) until 2014.|
|Which of the statements given above are correct?|
A) 2 and 3
B) 2, 3 and 4
C) 1, 2 and 3
D) All of these
Correct Answer: C
Solution :[c] The first three statements are the recommendations of the Shome Committee. GAAR is a general rules, which aims to check the purposeful tax evasion. It allows the legitimate tax planning. The committee asked the government not to adopt this tax rule until 2016. Other recommendations of the committee includes, not applying GAAR to check residential status of investors in Mauritius, amending the Income Tax Act and rules appropriately etc.
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