In the 2016 year end review, CBDT the apex policy making body of the IT dept declared GAAR will kick in from April 2017.
Legislation against tax avoidance, GAAR or General Anti Avoidance Rules is on a long list of CBDT achievements.
Legislations enacted in 2016-2017- Enactment of The Benami Transactions (Prohibition) Amendment Act, 2016,
- Implementation of The Direct Tax Dispute Resolution Scheme, 2016
- General Anti Avoidance Rules 2017
Regarding GAARIn May 2016, consultations were started with stakeholders asking clarity for implementation of GAAR. GAAR is part of the 2012-2013 Budget speech of then FM Pranab Mukherjee.
It is a legislation to check tax evasion and avoidance.
GAAR was initially not implemented because of the concerns of foreign investors.
It was originally to be implemented from April 2014. It will come into effect from April 1, 2017 (assessment year 2018-2019).
The Rules contain provisions permitting the government to prospectively tax overseas deals involving local assets.
Foreign investors have objected to GAAR, saying it could be used to target P-notes as indirect investment. This would attract tax rate of 15 percent.
Investor may then have to set up P-Notes to specifically avoid paying taxes. In the Budget 2015, GAAR was deferred by two years.
