Countering the tax avoidance through codification of the General Anti-Avoidance Rule (GAAR) : Clause 178 of the Income Tax bill, 2025 Vs. Section 95 of the Income Tax Act, 1961
26 April, 2025
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General Anti-Avoidance Rule: empowers authorities to disregard abusive arrangements and recharacterise tax consequences subject to safeguards. Clause 178 codifies GAAR with an overriding non-obstante effect, enabling authorities to declare an arrangement an "impermissible avoidance arrangement" ... Summary
General Anti-Avoidance Rule: empowers authorities to disregard abusive arrangements and recharacterise tax consequences subject to safeguards.
Clause 178 codifies GAAR with an overriding non-obstante effect, enabling authorities to declare an arrangement an "impermissible avoidance arrangement" and determine tax consequences, applying to whole arrangements or any step or part, based on tests of commercial substance and main purpose, while procedural safeguards-notice, hearing, and an approving panel-are prescribed to temper broad remedial powers.
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