India's union Finance minister P Chidambaram has said on Monday that the government has decided to defer the GAAR (General Anti-Avoidance Rules) by two years to April, 2016.

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.

The government claims that the GAAR is not aimed at troubling honest taxpayers in the country and allow the authorities to check tax evaders. The new rules will look to curb the increasing number of tax avoidance schemes.