CA Paras Mehra
Tax Evasion and avoidance is a main problem in every country. Taxpayer can choose any tax efficient method but that method should not for the purpose to obtain tax benefit. General Anti Avoidance Rules (hereinafter referred to as GAAR) has been introduced by Government to overcome from these problems. GAAR provisions aims at reducing or preventing “impermissible tax avoidance”.
These provisions were made applicable by the Finance Act, 2012 with effect from 1-4-2014 (i.e., assessment year 2014-15). Since a number of representations were received against the GAAR, an expert committee (Shome Committee) was appointed. The Shome Committee submitted its report. Based on the report, certain decisions to make amendments to GAAR were announced by Government on 14-1-2013. Thus, amendments to GAAR were expected in the Finance Act, 2013. And true to expectations, the Finance Act, 2013 has substituted Chapter X-A with a new Chapter X-A with effect from assessment year 2016-17.
GAAR is intended to target tax evaders, especially Indian companies and investors trying to route investments through Mauritius or other tax havens in order to avoid taxes. GAAR is typically a statutory rule that empowers a revenue authority to deny taxpayers the benefit of an arrangement that they have entered into for an impermissible tax-related purpose.
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