Girish Vanvari, Co-head Tax, KPMG India, said on Friday the Union Finance Minister’s suggestion regarding the Tax Residency Certificate (TRC) as insufficient for foreign investors to claim benefits under the Double Taxation Avoidance (DTA) treaty with Mauritius could be seen as the “backdoor entry” of General Anti Avoidance Rules (GAAR).
Finance Minister P. Chidambaram in his Budget speech on Thursday said a TRC would be necessary but not “sufficient” to claim benefits under the DTA treaty between India and Mauritius for foreign institutional investors.
“There is a lack of clarity for the foreign investor as to what additional details should be furnished to get the benefits. This could be seen as the entry of GAAR of taxation through the back door,” Vanvari said.
He was speaking to presspersons on the sidelines of a seminar on Budget analysis organised jointly by KPMG and the Bengal Chamber of Commerce and Industry.
According to a KPMG note released on Friday on the FY14 Budget, for non-residents, submission of TRC containing prescribed particulars has been made necessary, but this is not a sufficient condition for claiming benefit of the tax treaty. This amendment is to take retrospective effect from financial year 2012-13.