With the goods and services tax (GST) having completed the first 100 days, it is time for taxpayers to turn their focus towards another “G”—General Anti-Avoidance Rules (GAAR), which has been made effective from 1 April 2017 in Indian tax law, and which is the other watershed event in the evolution of India’s tax policy and legislation. “Judicial” GAAR has been around and applied in the past in India, but the introduction of the “legislative” GAAR gives a new twist to this interesting topic of tax discussion, and requires both taxpayers and tax practitioners to realign their approach to tax planning. There is a line, at times thin, dividing the case of a taxpayer availing of tax benefits legally available under the law from that of what appears to be an artificial transaction undertaken with the main purpose of tax avoidance. Given the long disposal time at present for cases with the Authority for Advance Ruling, a fast-track mechanism for pre-clearance of transactions would aid in reducing the inherent uncertainty in these provisions. As is commonly understood, GAAR applies to an arrangement where the main purpose is to obtain a tax benefit, and which, among others, lacks commercial substance. All in all, it will be an interesting road ahead where the key aspect for all stakeholders would be to follow the intent of the GAAR provisions in their true spirit.
John Distilleries Private Limited (JDPL), a leading liquor maker in India, announced that Sazerac Company, a family-owned spirits company in the United States has acquired an equity stake in it. Sazerac, owners of brands including Fireball, Southern Comfort, Buffalo Trace Bourbon, Pappy Van Winkle Bourbon and E H Taylor Bourbon, had acquired an equity stake in JDPL from Gaja Capital, who would continue to remain partially invested in the company. This strategic partnership marks Sazerac’s entry into the Indian market.
Bermuda-based reinsurer XL Group has bought a 20% stake in Mahindra Insurance Brokers (MIBL), valuing the company at Rs.1,300 cr. MIBL, is a subsidiary of Mahindra & Mahindra Financial Services and a licensed composite broker (insurance and reinsurance) with a 13-year track record. The XL Group will be purchasing stake from LeapFrog Financial Inclusion Fund — an existing shareholder.
Financial products marketplace BankBazaar has raised $30 million in a Series D round led by global credit rating agency Experian. This brings the Amazon-backed company’s total funding to $110 million. With this new funding, BankBazaar will bring more customers on board through marketing, and will push its paperless products.
Delhi-based apparel retailer V2 Retail Ltd has raised Rs.76 cr. from Lighthouse Advisors India, a middle market private equity firm focused on growth investments in India’s consumer sector. Public-listed V2 Retail, earlier known as Vishal Retail Ltd, will use the proceeds to accelerate its store expansion plans.