General anti-avoidance rules should target only abusive arrangements, with commercial substance tests, treaty safeguards, and procedural limits. The Committee recommended that GAAR be deferred for three years, apply only to arrangements whose main purpose is obtaining tax benefit, and be confined to abusive, contrived and artificial arrangements. It proposed a statutory definition of commercial substance, restriction of connected person, a tax-benefit threshold for applicability, grandfathering of existing investments, and non-override of treaty anti-avoidance provisions where the treaty itself contains limitation of benefits or similar safeguards.
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Provisions expressly mentioned in the judgment/order text.
General anti-avoidance rules should target only abusive arrangements, with commercial substance tests, treaty safeguards, and procedural limits.
The Committee recommended that GAAR be deferred for three years, apply only to arrangements whose main purpose is obtaining tax benefit, and be confined to abusive, contrived and artificial arrangements. It proposed a statutory definition of commercial substance, restriction of connected person, a tax-benefit threshold for applicability, grandfathering of existing investments, and non-override of treaty anti-avoidance provisions where the treaty itself contains limitation of benefits or similar safeguards.
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