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GAAR, POEM to come into effect from Apr 1: Govt

NEW DELHI: Rules for anti-tax avoidance and place of effective management are “here to stay” and will be implemented from April 1, the Government today said emphasising the rules have been delayed long enough and can not be deferred any more.

While Place of Effective Management (POEM) requires foreign firms to pay taxes in India if the effective control of business lies within the country, General Anti-Avoidance Rules (GAAR) seeks to prevent companies from routing transactions through other countries to avoid taxes.

“GAAR and POEM are here to stay… Now there is no question of going back on it. GAAR has been postponed for last 5 years. We can’t postpone it any more,” Revenue Secretary Hasmukh Adhia said at a post-Budget seminar here.

The Tax department feels that the adoption of anti-abuse rules in tax treaties may not be sufficient to address all tax avoidance strategies and the same are required to be tackled through domestic anti-avoidance rules.

“I really wonder why we are scared of POEM. POEM is not for Indian companies doing genuine business outside. It is for those companies which are creating structures outside the country, mainly to get passive income from stocks and investments,” he said. (AGENCIES)

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