General Anti-Avoidance Rule curbs impermissible tax arrangements by recharacterising steps, denying benefits, and overriding avoidance structures.

GAAR applies to arrangements or individual steps that constitute an impermissible avoidance arrangement, allowing tax consequences to be determined notwithstanding other provisions. An arrangement is impermissible where its main purpose is to obtain a tax benefit and it creates non-arm's length rights or obligations, misuses the Act, lacks commercial substance, or is carried out by means not ordinarily used for bona fide purposes. Where applicable, authorities may disregard, combine, recharacterise, or look through arrangements and deny tax or treaty benefits, subject to stated exceptions and procedural safeguards.

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