Prime Minister Manmohan Singh Friday set up an experts' committee to review and rework the controversial General Anti Avoidance Rules (GAAR) tax provision. 

The four-member committee to be headed by Parthasarathi Shome, director and chief executive of the Indian Council for Research on International Economic Relations (ICRIER), has been asked to submit its report to the government by Sep 30, 2012, according to a statement released by the Prime Minister's Office. 

The committee will hold consultations with various stakeholders and finalise the draft GAAR guidelines. The second draft guidelines on the controversial anti-avoidance rules have to be published by Aug 31. The announcement of setting up the expert panel comes within two weeks of the release of draft guidelines. The guidelines were released on direction of the prime minister, who now holds the finance portfolio. 

Other members of the panel are N. Rangachary, former chairman of Insurance Regulatory Development Authority; Ajay Shah, professor at the government-run National Institute of Public Finance Policy (NIPFP); and Sunil Gupta, joint secretary, tax policy and legislation in the finance ministry. 

The then finance minister Pranab Mukherjee announced the General Anti Avoidance Rules as part of the budgetary proposal in the 2012-13 union budget presented in parliament in March this year. 

However, following widespread protests from business community and political parties, Mukherjee later deferred the implementation of the new tax rules by one year. 

The new rules will now be applicable from the beginning of the next financial year instead of April 1, 2012, as earlier proposed. 

"While postponing GAAR by one year to 2013 was a very welcome move, a widespread consultative process is necessary to generate a discussion on GAAR provisions so that there is an informed debate on how GAAR is going to operate," the statement released by the PMO said. 

The statement said the new committee would help bring transparency in the implementation of the new tax rules. 

The terms of reference of the committee include: 

--Receiving comments from stakeholders and the general public on the draft GAAR guidelines, which have been published by the government on its website. 

--Vet and rework the guidelines based on this feedback and publish the second draft of the GAAR guidelines for comments and consultations. 

--Undertake widespread consultations on the second draft GAAR guidelines 

--Finalise the GAAR guidelines and a roadmap for implementation and submit these to the government. 

The Department of Revenue will provide all necessary support to the expert committee to facilitate its work, including office assistance and assistance to facilitate consultations, the PMO said. (Times of India)