The panel will be headed by tax expert Parthasarathi Shome and will submit its report on 30 September. Also read: What is GAAR
The committee will meet all stakeholders and address investor concerns across the board.
The development comes after finance ministry officials met tax consultants last week and held discussions on the tax reform.
N. Rangachary, former IRDA chairman; Sunil Gupta, joint secretary, tax policy and legislation, department of revenue, and NIPFP professor Ajay Shah will be the other members of the committee, said a release from the Prime Minister's Office.
The committee will have time till end-July to receive comments from stakeholders and the general public, and will have until August 31 to rework the guidelines based on these recommendations and submit a second draft, the release said.
"While these steps (the draft guidelines released last month) are good in themselves, a need was felt for far more widespread consultations. There is a need to have greater clarity on many other fronts. With this in view, the Prime Minister has constituted this expert committee which will bring transparency and a high degree of technical expertise to the consultation process," the release added.
GAAR, which was announced in the Union Budget, aims to target tax evaders, partly by stopping Indian companies and investors from routing investments through Mauritius or other tax havens for the sole purpose of avoiding taxes.
According to estimates released in May, Indian markets have lost $10 billion worth investments from the overseas funds and ultra-rich foreign individuals over a period of little more than one month on taxation worries.
These investors, who mostly invest through P-Notes (participatory notes) in the Indian markets have either pared their exposure to the Indian securities or have deferred their investments ever since India proposed GAAR late in March 2012.