Prime Minister Dr Manmohan Singh today expanded the terms of reference of the General Anti-Avoidance Rules, GAAR, committee by referring the issues relating to taxation of Foreign Institutional Investors, FIIs and portfolio investors to it with a view to provide greater clarity to them.

The Prime Minister Office said in a statement that it is necessary to have clarity on the tax liability of portfolio investors and FIIs as a result of this amendment (relating to GAAR), particularly, when the investment is made through a registered stock exchange in accordance with SEBI guidelines and purely in the form of portfolio investment.

Making additional reference to the committee, the statement said any clarification needs to be harmonised with the GAAR guidelines and will have to address any residual concerns outside of GAAR.

Earlier this month, the Prime Minister had set-up a panel headed by ICRIER chief and taxation expert Parthasarathi Shome to bring greater clarity and prepare a roadmap for GAAR by September 30 for its implementation.

Prime Minister's Office today said that Draft Guidelines on General Anti-Tax Avoidance Rules, GAAR, have been put on the government website to get wide-ranging feedback on the issue. An official release issued by the PMO says, the final decision will be taken with the approval of the Prime Minister who holds the Finance portfolio. The draft GAAR guidelines were posted on the website by the Finance Ministry late last night. The proposed guidelines seek to address investor concerns over taxation issues. The draft said that GAAR provisions would be invoked only in cases where FIIs choose to take the benefit of double tax avoidance treaties. The provisions, it said, will apply only to the income arising to taxpayers on or after April 1, 2013. According to the Finance Ministry release, the Central Board of Direct Taxes, CBDT has invited suggestions on draft Guidelines regarding the implementation of GAAR. Details are available on the websites www.pib.nic.in, www.finmin.nic.in and www.incometaxindia.gov.in. The suggestions on the draft guidelines can be forwarded to the concerned department till the 20th of next month. The Prime Minister has already announced his intent to rework the tax framework. During his first meeting with the Finance Ministry brass on Wednesday, Dr Singh said that reviving investors' sentiments will be his top priority. He also hinted at accelerating the financial sector reforms, including those in the insurance and mutual funds sectors and said, some quick measures will have to be taken to address them.