Finance Minister Pranab Mukherjee said in a speech today about Finance Bill 2012 in the Lok Sabha, that the implementation of General Anti-Avoidance Rules (GAAR) will now be effective from April 1, 2013 instead of April 2012, deferring its application by a year. The government halved the capital gains tax for private equity investors to 10% and relaxed the norms for arrest of persons involved in violation of Customs Act. Speaking on amendments in the Finance Bill in parliament, Mukherjee also said the onus of proof will lie with the tax authorities and that the proposed retrospective amendment of income tax laws will not override DTAAs with 82 countries. The government has decided to withdraw the levy (1% excise duty) on all precious metal jewellery, branded or unbranded, with effect from March 17, 2012. The government on Monday rolled back the proposed 1% deduction at source (TDS) on transfer of immovable property. The Finance Bill proposes that every transferee of immovable property (other than agricultural land), at the time of making payment for transfer of the property, shall deduct tax at the rate of 1% of such sum.
Equity Markets sharply bounced up on these announcements. The INR too bounced back sharply following the FM’s commentary and expectations of RBI’s intervention too aided the rebound in the Indian currency. INR moved up 1% or 58 paise to 52.88 a dollar as short covering and inflow of foreign money led the recovery. The BSE Sensex gained 81.63 points or 0.48%, to close at 16,912.71 after seeing a recovery of nearly 400 points from day’s low of 16,513.77. The NSE Nifty down to 5000 level at one point of time surpassed the 5100 level in last hour trade & closed at 5,114.15, up 27.30 points by 0.54%.
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