KOLKATA, 28 June: In an attempt to provide a platform for tax payers and tax professionals and enable them to understand the challenges and issues under the new tax codes, CII in association with PwC India organized a Session on Tax issues of Place of Effective Management (POEM), General Anti Avoidance Rules (GAAR) and GST Compliance Solutions here today where leading tax experts gathered to brainstorm on the issues relevant to businesses.
At the inaugural session, Mr Umesh Chowdhary, Chairman, CII Eastern Region & Vice Chairman and Managing Director, Titagarh Group, described GST as India's most significant tax reform in decades. “Now, all the companies are preparing to switch to GST, regime which is expected to simplify tax collection procedures, remove double taxation at various levels,” he said.
With India moving towards global tax compliance strategies, two concepts were brought under the tax system in the last Budget namely PoEM and GAAR, he said, adding that the Government has also given its nod for the tax system marking India’s great leap forward towards global compliance. “While PoEM deals with foreign companies paying tax in India, GAAR seeks to prevent companies from routing transactions through other countries to avoid taxes,” Mr Chowdhary said.
Mr Avijit Mukerji, Vice Chairman, CII West Bengal State Council & Regional Managing Partner and Assurance Leader, East, PwC, said, “GST is expected to usher in a harmonized national market of goods and services and shall lead to a simplified, assesse-friendly tax administration system. It will not only make India a single market, but can also enhance ease of doing business. It will make the entire economy more efficient and productive by lowering transaction, transport and logistics costs, and can add to the GDP growth rate,” he said.
Ms Sushmita Basu, Partner, PwC, said GAAR, which pertains to tax avoidance, is an impermissible avoidance arrangement (IAA). “Irrespective of tax residential status, GAAR applies to all assesses. The threshold limit is Rs 3 crores for tax benefit to be enjoyed in the Indian jurisdiction. GAAR and SAAR can coexist as applicable on facts of case,” she added.
Mr Pallav Gupta, Head – Taxation, ITC Ltd, mentioned that government has every right to question whether business transactions are business driven and not for tax avoidance. Mr Gupta added that every decision should be routed through the Tax Head in the company, well at the designing stage. He mentioned that POEM is applied only to shell companies. CII had suggested to the government for Manufacturing in India and marketing outside India.
Mr Kuntal Sen, Executive Director, PwC, said the government has every right to question whether a transaction is really business driven and not for tax avoidance. He added that every decision should be routed through the Tax Head in the company, well at the designing stage. He also mentioned that POEM applies to shell companies only.
Mr Vijay Mathur, Senior Advisor, PwC India and Retired DG (International Taxation) CBDT, spoke of the need to train tax payers on GAAR and POEM. “It is a tough call for the tax department with so many new provisions on the statute. POEM will however be faced by the large tax payers i.e. the big companies,” he said.
Mr Nikhil Bhatia, Tax Partner- Direct Tax, Leader of PwC Eastern India Tax Practice, pointed out that GST will not only allow one to do business for commercial reasons other than for tax, but will also help address GAAR problems.