SAAR provisions, introduced in India from 2001 and GAAR in 2012, have generated much heat amongst the corporate sector (MNEs as well as Indian), tax professionals and tax administration. The author has studied these provisions thoroughly, and through his practical experience of tax administration and his extensive knowledge in the area of International Taxation, has attempted to provide a clear understanding of the law on the subject and discussed the issues that may require sorting out. The subject itself is of great significance because the provisions studied not only result in substantial additional tax collection, but also effectively determine the trend of FDI as well as “portfolio investments” in India. Misuse of such investments, by Foreign Institutional Investors (FIIs) and other such entities, through “treaty shopping” and “round tripping” is well documented. But at the same time, transfer price adjustments on account of capital infusion by multinational parents in Indian subsidiaries, being attempted by tax authorities currently, are of doubtful validity and may turn out to be detrimental to FDI inflow in India. Transfer pricing adjustments, involving huge amounts and affecting top multinationals in India, in the recent past, have attracted international attention. Over-zealous tax collectors are treading in areas, which probably were not intended by the relevant statutory provisions. It is time that these transgressions are not only studied but properly evaluated as per acceptable norms of tax jurisprudence and equity.
Tax laws are fast changing and to keep pace with them is almost impossible. In contemporary times, the subject of this book is one of the most contentious legal issues, and requires urgent and substantive resolution.
The issues, whenever they arise, would require quick resolution. At the same time, in respect of transfer price adjustments, provisions relating to “safe harbour rules” and “advance pricing agreements”, already brought on the statute book, should be effectively implemented as soon as possible.
The author hopes that this book would be a significant contribution to the field of knowledge, commonly known as “International Taxation”.