General anti-avoidance rule (India)

For other uses, see Tax avoidance.

General anti-avoidance rule (GAAR) is an anti-tax avoidance law under Chapter X-A of the Income Tax Act, 1961 of India.[1] It is framed by the Department of Revenue under the Ministry of Finance. GAAR was originally proposed in the Direct Tax Code 2009 and was targeted at arrangements or transactions made specifically to avoid taxes. GAAR provisions were also present in the Direct Tax Code 2010 and Direct Tax Code 2013. However, the Direct Tax Code did not see the light of the day and was not implemented in India. GAAR was finally introduced in India by then Finance Minister, Pranab Mukherjee, on 16 March 2012 during the Budget session introduced vide Finance Act, 2012.[2] However, it was considered controversial because it had provisions to seek taxes from past overseas deals involving local assets retrospectively .[3]

During the 2015 Budget presentation, Finance Minister Arun Jaitley announced that its implementation will be delayed by 2 years.[4] GAAR is finally applicable from assessment year 2018-19.[5]

  1. ^ "Tax Laws & Rules > Acts > Income-tax Act, 1961". www.incometaxindia.gov.in. Retrieved 21 October 2018.
  2. ^ "Taxsutra". www.taxsutra.com. Retrieved 21 October 2018.
  3. ^ "5 facts about the general anti-avoidance rule (GAAR)". NDTV. 14 May 2012. Retrieved 7 March 2015.
  4. ^ "Indian shares gain on GAAR delay, plan to reduce corporate tax rate". Reuters. 28 February 2015. Archived from the original on 7 March 2016. Retrieved 7 March 2015.
  5. ^ "GAAR will be effective April 1, 2017, onwards: CBDT". Business Standard India. Press Trust of India. 27 January 2017. Retrieved 21 October 2018.