GARR (General Anti Avoidance rule)

GAAR limits avoidance of taxes. It was proposed by the then finance minister
Mr. Pranab Mukherjee introduced to chapter X-A to the income tax Act 1961. It
directly targets the tax evaders. In Indian law, GAAR is an acronym for General
Anti-Avoidance Rules which are framed to minimize tax avoidance. for
example by siphoning off profits to tax havens.
Tax havens are countries which have low tax regimes which provide
individuals and business opportunities of tax avoidance or tax evasion. There
are roughly 45 tax havens in the world today. In Indian context, Mauritius is
considered to be the most significant tax havens or tax evading route.
GAAR could be termed as a general set of rules enacted to limit tax
avoidance. It was proposed by the Union Budget 2012-13. The finance bill 2012
introduced chapter X-A to the income Tax Act-1961. Tax avoidance rule
GAAR to be effective from April 2015. People adopt various methods so that
they can reduce their total tax liability. The methods adopted to reduce their tax
liability can be broadly put into four categories: "Tax Evasion"; "Tax
avoidance", "Tax Mitigation" and "Tax Planning". GAAR provides to curb the
second method- Tax avoidance.
GAAR is a concept which generally empowers the Revenue Authorities
in a country to deny the tax benefits of transactions or arrangements which do
not have any commercial substance or consideration other than achieving the
tax benefit. GAAR is intended to target tax evaders, especially Indian
companies and investors trying to route investments through Mauritius or other
tax havens in order to avoid taxes. GAAR provides discretionary powers to
revenue authorities to tax impermissible avoidance arrangements. The
arrangements as a whole or aim part may be disregarded and tax benefit denied.
GST (Goods and Service Tax)

It is a comprehensive tax levy on manufacture, sale and consumption of goods
and services at a national level.
The Goods and Services Tax (GST) is a Value Added Tax (VAT) to be
implemented in India.The decision on which is pending. It will replace all
indirect taxes levied on goods and services by the Indian Central and State
governments. It is aimed at being comprehensive for most goods and services.
World over, GST rates are typically between 16 per cent and 20 per cent. In
India, it is likely to be the same.
Through a tax credit mechanism, this tax is collected on value-added
goods and services at each stage of sale or purchase in the supply chain.
The system allows the set-off of GST paid on the procurement of goods and
services against the GST which is payable on the supply of goods or services.
However, the end consumer bears this tax as he is the last person in the supply
chain.
India is planning to implement a dual GST system. Under dual GST, a
Central Goods and Services Tax (CGST) and a State Goods and Services Tax
(SGST) will be levied on the taxable value of a transaction.
How will GST be implemented?
The empowered committee is likely to finalize the details of GST by
August. But States have to sort out several issues like agreement on GST rates,
constitutional amendments and holding talks with industry associations. Experts
feel the drafting of legislation and the implementation of law will take time.


What are the benefits of GST?
Under GST, the taxation burden will be divided equitably between
manufacturing and services, through a lower tax rate by increasing the tax base
and minimizing exemptions.
It is expected to help build a transparent and corruption-free tax
administration. GST will be is levied only at the destination point, and not at
various points (from manufacturing to retail outlets).
Currently, a manufacturer needs to pay tax when a finished product
moves out from a factory, and it is again taxed at the retail outlet when sold.

SEZ (Special Economic Zone)

The term special economic zone (SEZ) is commonly used as a generic term to
refer to any modern economic zone. In these zones business and trades laws
differ from the rest of the country. Broadly SEZs are located within a country's
national borders. The aims of the zones include: increased trade, increased
investment, job creation and effective administration. To encourage businesses
to set up in the zone liberal policies are introduced.
India was one of the first in Asia to recognize the effectiveness of the
Export Processing Zone (EPZ) model in promoting exports, with Asia's first
EPZ set up in Kandla in 1965.
The main objectives of the SEZ Act are:
(a) generation of additional economic activity
(b) promotion of exports of goods and services
(c) promotion of investment from domestic and foreign sources
(d) creation of employment opportunities
(e) development of infrastructure facilities
It is expected that this will trigger a large flow of foreign and domestic
investment in SEZs, in infrastructure and productive capacity, leading to
generation of additional economic activity and creation of employment
opportunities.
Approval mechanism
The developer submits the proposal for establishment of SEZ to the
concerned State Government. The State Government has to forward the
proposal with its recommendation within 45 days from the date of receipt of
such proposal to the Board of Approval. The applicant also has the option to
submit the proposal directly to the Board of Approval.
The Board of Approval has been constituted by the Central Government in
exercise of the powers conferred under the SEZ Act. All the decisions are taken
in the Board of Approval by consensus. The Board of Approval has 19
Members.
Types
The term Special Economic Zone can include
Free trade zones (FTZ)
Export processing zones (EPZ)
Free Zones/ free economic zones (FZ/ FEZ)
Industrial parks/ industrial estates (IE)
Free ports
Bonded logistics parks (BLP)
Urban enterprise zones