What is GAAR
General anti avoidnce rule..it implmnt frm aprl 2016
** note please refer vodafone-hutch capital gains tax case for better understanding of the topic....
General Anti Avoudance Rule
GAAR stands for General Anti Avoidance Rules.
GAAR is a set of rules to check on tax-avoidance.
-Under these rules, I can take action against those people involved in tax avoidance.
-I, the Income Tax Commissioner, will have full power to decide whether a business deal is genuine or some sham to avoid tax payment. It doesn’t matter whether the business deal was done in India or outside India or
It doesn’t matter whether the deal is between any Indian citizens / NRIs / Foreigners.
-It doesn’t matter whether the deal is protected by some bi-lateral tax treaty between India and the given country.
-GAAR provisions shall override the terms of any Double Taxation Avoidance Agreement (Tax Treaty) that India may have entered into.
No ifs and not buts; I'll have full jurisdiction to question any business deal.
-I can send notice to the concerned parties and demand explanation.
After hearing their side, if I’m not satisfied, I shall order my Assessing offer (AO) within 12 months, to take necessary action against them and recover the taxes.
-If the party is unhappy with my order, it can appeal in Dispute resolution Panel (DRP), which will consist of three IT Commissioners like me.
-DRP will have to give the verdict in nine months.
-If the party is still unhappy with DRP verdict, it can file appear before the Income Tax Appellate Tribunal (ITAT)
-If party is unhappy even after ITAT verdict, it can approach High court and Supreme Court.