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.
- 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.
