Mumbai: The government on Friday announced it will finally implement the General Anti-Avoidance Rule (GAAR), the much awaited anti-tax avoidance reforms, from April 1 in 2017.
“General Anti-Avoidance Rule will be effective April 1, 2017 onwards,” Finance Ministry said.
The anti-tax avoidance measures were incorporated in Direct Taxes Code on their introduction in 2010. The laws were first introduced in Parliament during 2012 Budget session by the then Finance Minister Pranab Mukherjee.
The Finnace Ministry led by Arun Jaitley has also made it clear that GAAR will not apply to foreign portfolio investors if main purpose of jurisdiction finalised is not to obtain tax benefits.
“GAAR will not interplay with right of taxpayer to choose method of transaction,” the ministry said.
The ministry further informed that GAAR invocation to involve two-stage process: first by I-T principal commissioner, second by panel headed by HC judge. GAAR not to be invoked if tax treaty benefits are derived within Limitation of Benefits provisions.
