The Finance minister has stated that GAAR (General Anti-Avoidance Rules) will be deferred by two years. This will be a big relief to the foreign investors. Consequently, GAAR will be applicable prospectively from April 2017 onwards. It is noteworthy that GAAR was originally proposed in 2012 and was supposed to come into effect on April 1, 2013. However, later it was deferred by two years. Now, Finance minster has extended it further to April 1, 2017. Under the GAAR regime, the Indian authorities can refuse tax benefit to any arrangement entered with an intension to avoid tax. This system could have taxed the foreign investors that route investments in India through various tax havens.
On the taxation front, Mr. Arun Jaitley has introduced 2% surcharge on super rich and has abolished wealth tax. The target date for implementation of GST has been set around April 2016. The custom duty on 22 items has been reduced and the excise on leather upper shoes is cut by 6%. The service tax has been increased from 12.3% to 14%.