The Central Board of Direct Taxes (CBDT), through Notification No. 54/2026 dated 31st March 2026, has amended Rule 10U of the Income-tax Rules, 1962 via the Income-tax (Tenth Amendment) Rules, 2026. The amendment clarifies the applicability of Chapter X-A (General Anti-Avoidance Rules – GAAR) concerning investments made before 1st April 2017. Specifically, it provides that any income arising from the transfer of such pre-2017 investments shall be excluded from the ambit of GAAR. Further, while GAAR provisions will apply to tax benefits arising on or after 1st April 2017 irrespective of when the arrangement was entered into, an explicit exception has been carved out for income derived from the transfer of grandfathered investments. The explanatory memorandum reinforces that GAAR will not be invoked in such cases from the date of publication of the notification, thereby offering clarity and certainty to taxpayers holding legacy investments and ensuring protection of previously grandfathered transactions.
MINISTRY OF FINANCE
(Department of Revenue)
(CENTRAL BOARD OF DIRECT TAXES)
Notification No. 54/2026-Income Tax | Dated: 31st March, 2026
G.S.R. 240(E).— In exercise of the powers conferred by section 295 read with section 101 of the Income-tax Act, 1961 (43 of 1961), the Central Board of Direct Taxes hereby makes the following rules further to amend the Income-tax Rules, 1962, namely: ___
1. (1) These rules may be called the Income-tax Rules, 2026.
(2) They shall come into force on the date of their publication in the Official Gazette.
2. In the Income-tax Rules, 1962, in rule 10U, —
(a) in sub-rule (1), for clause (d), the following clause shall be substituted, namely: —
“(d) any income accruing or arising to, or deemed to accrue or arise to, or received or deemed to be received by, any person from transfer of such investments which were made before the 1st day of April, 2017 by such person.”;
(b) for sub-rule (2), the following sub-rule shall be substituted, namely: —
“(2) The provisions of Chapter X-A shall apply to any arrangement, irrespective of the date on which it has been entered into, in respect of the tax benefit obtained from the arrangement on or after the 1st day of April, 2017, except for that income which accrues or arises to, or deemed to accrue or arise to, or is received or deemed to be received, by any person from transfer of such investments which were made before the 1st day of April, 2017 by such person.”.
[Notification No. 54/2026/F. No. 370142/15/2026-TPL]
ROHIT SINGH, Under Sey., TPL-I, CBDT
Explanatory Memorandum: The amendment will have the effect that the provisions of Chapter X-A shall not be invoked on or after the date of publication of these rules in the Official Gazette in a case where income accrues or arises to, or deemed to accrue or arise to, or is received or deemed to be received, by any person from transfer of such investments which were made before the 1st day of April, 2017 by such person.
