An expert panel appointed by Prime Minister Manmohan Singh to review the provisions of the General Anti-Avoidance Rules (GAAR) has recommended for extending the deadline for implementation of the rules to prevent tax evasion by three years.

As per the previous recommendations, the GAAR rules were to come into effect from 2013.

The recommended three-year postponement of the rules means that the responsibility to implement the rules will be on the party that will come into power after the general elections of 2014.

While the panel, headed by tax expert Parthasarathi Shome, claimed in a media interview that the panel was not under any pressure to defer the controversial tax proposals, many believe that the government wanted to avoid implementing the rules to pacify foreign institutional investors.

The report of expert committee on GAAR also suggested that the rules should only cover arrangements where the key purpose is to get a tax benefit, and not those arrangements in which this is just one of the many purposes.

Industry and observers have described draft GAAR guidelines as "encouraging," saying it has provided a clear definition by addressing ambiguity in the previous guidelines.

FICCI has expressed hope that the draft GAAR guidelines would lead to bold policy decisions that will restore confidence and revive growth.