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GAAR: India defers tax evasion measures by a year


 India will delay by one year until fiscal 2013/14 the introduction of measures to crack down on tax evasion, finance minister Pranab Mukherjee said on Monday, responding to concern among foreign investors that has led to an exodus of funds.

Mukherjee also told Parliament that the burden of proving tax evasion will lie with the authorities rather than with overseas investors.

Commentary Radhika Rao, Economist, Forecast pte, Singapore- "These comments should provide short-term relief to the domestic markets, however, the decision to put the onus on tax authorities to prove liabilities could infuse some extent of ambiguity and subjectivity into the proposals.

"For now, the markets will cheer clarity on the provisions and deferment of the implementation date." - Sandip Sabharwal, CEO, portfolio management, Prabhudas lilladher, Mumbai

"GAAR ( General Anti-Avoidance Rules) deferral is extremely good for markets and economy as a lot of fund flows had come to a stand still because of this."

"At a time when our current account deficit is so high we can't scare away foreign capital. Now that GAAR is deferred, India will stop underperforming global peers at least."

Market Reaction - The Indian rupee was trading at 53.01 to the dollar, strengthening from 53.20 before the announcement. The benchmark stock index was down 0.5 percent, cutting losses of nearly 1 percent.

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