General Anti-Avoidance Rules (GAAR)
GAAR is an anti-tax avoidance framework embedded in Chapter X-A of the Income Tax Act, 1961 (Sections 95 to 102), introduced via the Finance Act, 2012, and made effective from April 1, 2017. The rules empower tax authorities to deny treaty and statutory tax benefits if an arrangement is found to lack commercial substance and serves primarily to avoid tax. GAAR operationalises the "substance over form" doctrine, meaning transactions are taxed based on their true economic character rather than legal structure.
- Contained in Sections 95–102 of the Income Tax Act, 1961 (Chapter X-A)
- Effective from April 1, 2017; applies to any tax benefit arising on or after that date, even for pre-2017 investments
- Procedural safeguards: Approving Panel (GAAR Panel) must sanction invocation; provides taxpayer the right to be heard
- Four categories of impermissible avoidance arrangements: misuse of treaty, lack of commercial substance, non-arm's length transaction, and abuse of legal provisions
- On March 31, 2026, CBDT issued notifications restoring grandfathering of pre-April 1, 2017 investments from GAAR — but the Supreme Court had already found Tiger Global's arrangement impermissible, so this relief does not apply to the case
● Tracked since April 01, 2026 · last seen April 12, 2026 · updates as the daily brief publishes
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