GAAR Applicable From 2017-18

The Finance minister, today, announced to defer the implementation of controversial GAAR provisions by 3 years. Some of the major recommendations of expert committee have been accepted, with some modifications, and the following decisions have been taken by the Government;

1) It has been decided that the provisions of GAAR shall come into force with effect from April 1, 2016 (as against the current provision of April 1, 2014);

2) The tax auditor will be required to report any tax avoidance arrangement;

3) An arrangement, with main purpose of obtaining a tax benefit, would be considered as an impermissible avoidance arrangement;

4) The AO will be required to issue a SCN to the assessee before invoking the provisions of GAAR;

5) The assessee shall have an opportunity to prove that the arrangement is not an impermissible avoidance arrangement;

6) There will be only one provision defining a ‘connected person’ unlike the present structure which includes two distinct definitions namely, ‘associated person’ and ‘connected person’;

7) The fact that an exit route was provided by the arrangement are not sufficient to determine whether the arrangement is an impermissible avoidance arrangement;

8) The directions of AP shall be binding on the assessee and on the Income-tax authorities;

9) Consequential adjustment arising from impermissible avoidance arrangement will be allowed to ensure that the same income is not taxed twice;

10) Investments made before August 30, 2010 will be grandfathered;

11) GAAR will not apply to FIIs not opting for taxation under DTAA;

12) GAAR will not apply to non-resident investors in FIIs;

13) There will be a monetary threshold of Rs. 3 crore of tax benefit in order to attract the provisions of GAAR;

14) Advance Ruling can be sought only on that part of arrangement which is impermissible and not in respect of the whole arrangement;

15) Where GAAR and SAAR are both in force, only one of them will apply to a given case, and guidelines will be made regarding their applicability;

16) Statutory forms will be prescribed for the different authorities to exercise their powers; and

17) Time limits will be provided for action by the various authorities under GAAR.


About Sudheer Paidi

I am a student studying chartered accountancy course started this blog for helping CA students

Posted on January 15, 2013, in News. Bookmark the permalink. Leave a comment.

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