A recent decision by the union government to delay the implementation of the general anti-avoidance rule (GAAR) to April 2016 has brought a sign of relief to the investors.

Daksha Baxi, ED-Taxation of Khaitan & Co said that the announcement by Finance minister P Chidambaram brings relief for the investors for a period of two years. The time will allow the investors to alter their structures in order to ensure that the GAAR would impact their investments.

The government has also decided to exempted non-resident investors in the Foreign Institutional Investors from the new regulations. Chidambaram also pointed out that the same income will not be taxed twice under the tax regime in the country and investments made before Aug 2010 will be grandfathered.

India members had earlier that the implementation of the General Anti-Avoidance Rules (GAAR) should be deferred as economic conditions in the country and the world are not adequate for a change in taxation policy. The GAAR has been criticized by the industry members as well as foreign investors as counterproductive for business sentiment in India.

Chidambaram said that the investor concerns relating to the GAAR have been addressed with a number of changes incorporated into its clauses. Firms who have not opted for any treaty benefits and are paying taxes normally in the country will not come under the GAAR framework, the ministry clarified to address concerns and clear the air over the proposed changes. The guidelines also said that non-resident investors of foreign institutional investors or FIIs will be exempt from the GAAR.