In an attempt to curb tax evasion and avoid tax leakage, the government introduced the General Anti-avoidance Rule (GAAR), which took effect from 1 April 2017. By doing so, India became one of the many countries which have enacted the GAAR and implemented jurisprudence thereon in recent years.
The GAAR is seen as a tool to:
- curb tax evasion; and
- monitor aggressive tax planning, especially transactions or business arrangements which are entered into with the aim of avoiding tax.
Following the introduction of the GAAR, businesses have had to revisit and revalidate their transactions. Further, as there are a number of potential issues that may be faced by taxpayers, they must observe the types of transaction that are likely to be affected.(1)
(1) A comprehensive overview of the GAAR is available here.
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