General Anti Avoidance Rules (GAAR)

General Anti Avoidance Rules Latest News

Income tax authorities may now be able to issue reassessment notices under General Anti Avoidance Rules (GAAR) under the new proposal under the Income Tax Bill 2025.

About General Anti Avoidance Rules

• It is an anti-tax avoidance law in India to curb tax evasion and avoid tax leaks.
• It came into effect on 1st April 2017. The GAAR provisions come under the Income Tax Act, 1961.
• GAAR is a tool for checking aggressive tax planning, especially those transactions or business arrangements that are entered into with the objective of avoiding tax.
• It is specifically aimed at cutting revenue losses that happen to the government due to aggressive tax avoidance measures practiced by companies.
• It is meant to apply to transactions that are prima facie legal, but result in tax reduction.
• Under current rules, reassessment notices where the under-reported income is Rs ₹50 lakh or more, have to be issued within 5 years and 3 months from the end of the assessment year.
• GAAR provisions give wide powers to tax authorities to treat any arrangement or a transaction as an ‘impermissible avoidance arrangement’ (IAA) and re-compute income and consequent tax implications.

‹ ›

General Anti Avoidance Rules FAQs

Q1. What is the anti-avoidance rule?

Ans. Its purpose is to deny tax benefits to any taxpayer that, although complying with a literal reading of the provisions of the tax rules, are not in compliance with the object, spirit or purpose of the legislation.

Q2. What is the difference between GAAR and Saar?

Ans. GAAR is general and it is aimed at targeting tax avoidance broadly. However, SAAR is specific and it assists in tackling particular tax avoidance schemes on a case-by-case basis

Source: TH