They say the more things change, the more they remain the same.
The story of General Anti-Avoidance Rules is somewhat similar.
Almost a year after it was sprung upon the markets, new Finance Minister P Chidambaram has deferred its implementation to April 2016, with some key changes.
Experts say, had the FM accepted some of the key recommendations of the expert panel headed by Parthasarathi Shome, it would have had a sweeping impact on markets.
But this has not happened.
The Shome panel had suggested the government make all gains from equity markets tax-free where STT has been paid.
One argument was that fund managers prefer to be based out of India since an Indian presence would raise tax issues for offshore funds.
"If this recommendation of making the gains exempt had been accepted, the domestic fund management industry would have got a massive boost.
"Further, the incentive for routing money by treaty shopping would have been taken away for investments in listed equities.
"This would have had a positive impact on the capital markets," explains Gautam Mehra, executive director, PricewaterhouseCoopers.
So, where's the devil in the fineprint? For starters, the retrospective element persists.
The expert panel had suggested GAAR be applicable only on investments made after the rules were implemented. Under the new norms, all foreign institutional investments (including FII sub-accounts and P-notes) made after August 2010 will come under GAAR, even if these
Tirthankar Patnaik, chief economist at Religare, says: "There's no positive surprise.
"It's not correct that GAAR will not be applicable on FIIs. Only those FIIs will escape GAAR which have not applied under the DTAA."
It is known that most FIIs do go through the DTAA route.
Most investments into India are routed through tax havens to get tax benefits.
So, investments made after August 2010 can come under the GAAR net if they have been routed from destinations where the entity does not have "substance" presence.
If investments have been made from Mauritius after August 2010, then they do not seem to have any protection from the GAAR provisions if sold after April 1, 2015.
According to Mehra: "Investors now get time to relook at their structures before the extended date of April 1, 2015, and to either gauge the impact of any potential tax leakage post that date, or to bolster substance in treaty protected jurisdictions so as to avoid the impact of GAAR."
The Shome panel had suggested that GAAR should apply to investments made after it was implemented.
In effect, investments (private equity and portfolio) made between 2010 and 2015 may be taxed retrospectively, if the authorities believe that the express purpose of these was to avoid tax.
The biggest positive in the new norms is the approving panel, which will decide on the applicability of GAAR.
This approving panel will be chaired by a retired high court judge, a senior member of the tax office and a reputed academician.
