{"id":465,"date":"2015-10-24T08:00:50","date_gmt":"2015-10-24T02:30:50","guid":{"rendered":"http:\/\/carajput.com\/blog\/?p=465"},"modified":"2021-11-17T18:02:31","modified_gmt":"2021-11-17T12:32:31","slug":"general-anti-avoidance-rules-gaar","status":"publish","type":"post","link":"https:\/\/carajput.com\/blog\/general-anti-avoidance-rules-gaar\/","title":{"rendered":"GENERAL ANTI &#8211; AVOIDANCE RULES GAAR"},"content":{"rendered":"<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_58 counter-hierarchy ez-toc-counter ez-toc-light-blue ez-toc-container-direction\">\n<p class=\"ez-toc-title\">Page Contents<\/p>\n<label for=\"ez-toc-cssicon-toggle-item-69d4df78003b4\" class=\"ez-toc-cssicon-toggle-label\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #000000;color:#000000\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #000000;color:#000000\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/label><input type=\"checkbox\"  id=\"ez-toc-cssicon-toggle-item-69d4df78003b4\"  aria-label=\"Toggle\" \/><nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/carajput.com\/blog\/general-anti-avoidance-rules-gaar\/#GENERAL_ANTI_%E2%80%93_AVOIDANCE_RULES_GAAR\" title=\"GENERAL ANTI &#8211; AVOIDANCE RULES GAAR\">GENERAL ANTI &#8211; AVOIDANCE RULES GAAR<\/a><ul class='ez-toc-list-level-3'><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/carajput.com\/blog\/general-anti-avoidance-rules-gaar\/#NOTE%E2%80%93%E2%80%9CTHIS_ARTICLE_IS_TO_GIVE_A_GENERAL_IDEA_ABOUT_GAAR_ONCE_IT_IS_INTRODUCED_IN_INDIA%E2%80%9D_THE_LAW_IS_NOT_YET_EFFECTIVE_IN_INDIA\" title=\"NOTE&#8211;\u201cTHIS ARTICLE IS TO GIVE A GENERAL IDEA ABOUT GAAR ONCE IT IS INTRODUCED IN INDIA\u201d THE LAW IS NOT YET EFFECTIVE IN INDIA\">NOTE&#8211;\u201cTHIS ARTICLE IS TO GIVE A GENERAL IDEA ABOUT GAAR ONCE IT IS INTRODUCED IN INDIA\u201d THE LAW IS NOT YET EFFECTIVE IN INDIA<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/carajput.com\/blog\/general-anti-avoidance-rules-gaar\/#Methods_adopted_to_reduce_tax_liability_can_be_broadly_classified_into_four_categories\" title=\"Methods adopted to reduce tax liability can be broadly classified into four categories:\">Methods adopted to reduce tax liability can be broadly classified into four categories:<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/carajput.com\/blog\/general-anti-avoidance-rules-gaar\/#GAAR_refers_to_Tax_avoidance\" title=\"*GAAR refers to Tax avoidance;\">*GAAR refers to Tax avoidance;<\/a><ul class='ez-toc-list-level-3'><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/carajput.com\/blog\/general-anti-avoidance-rules-gaar\/#What_are_Tax_Havens\" title=\"What are Tax Havens?\">What are Tax Havens?<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/carajput.com\/blog\/general-anti-avoidance-rules-gaar\/#Implications_of_GAAR_in_India\" title=\"Implications of GAAR in India:\">Implications of GAAR in India:<\/a><ul class='ez-toc-list-level-3'><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/carajput.com\/blog\/general-anti-avoidance-rules-gaar\/#GAAR_%E2%80%93_Example\" title=\"GAAR \u2013 Example\">GAAR \u2013 Example<\/a><\/li><\/ul><\/li><\/ul><\/nav><\/div>\n<h2 style=\"text-align: justify;\"><\/h2>\n<p><a href=\"https:\/\/carajput.com\/blog\/wp-content\/uploads\/2015\/10\/48.png\"><img loading=\"lazy\" decoding=\"async\" class=\" wp-image-9064\" src=\"https:\/\/carajput.com\/blog\/wp-content\/uploads\/2015\/10\/48.png\" alt=\"www.carajput.com; Tax Complainces\" width=\"784\" height=\"363\" \/><\/a><\/p>\n<h2 style=\"text-align: justify;\"><span class=\"ez-toc-section\" id=\"GENERAL_ANTI_%E2%80%93_AVOIDANCE_RULES_GAAR\"><\/span><span style=\"color: #000080;\"><strong>GENERAL ANTI &#8211; AVOIDANCE RULES GAAR<\/strong><\/span><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<h3><span class=\"ez-toc-section\" id=\"NOTE%E2%80%93%E2%80%9CTHIS_ARTICLE_IS_TO_GIVE_A_GENERAL_IDEA_ABOUT_GAAR_ONCE_IT_IS_INTRODUCED_IN_INDIA%E2%80%9D_THE_LAW_IS_NOT_YET_EFFECTIVE_IN_INDIA\"><\/span><span style=\"color: #ff6600;\"><strong><em><span style=\"text-decoration: underline;\">N<\/span><\/em><\/strong><strong><em><span style=\"text-decoration: underline;\">O<\/span><\/em><\/strong><strong><em><span style=\"text-decoration: underline;\">T<\/span><\/em><\/strong><strong><em><span style=\"text-decoration: underline;\">E<\/span><\/em><\/strong><strong><em><span style=\"text-decoration: underline;\">&#8211;<\/span><\/em><\/strong><strong><em><span style=\"text-decoration: underline;\">\u201c<\/span><\/em><\/strong><strong><em><span style=\"text-decoration: underline;\">T<\/span><\/em><\/strong><strong><em><span style=\"text-decoration: underline;\">H<\/span><\/em><\/strong><strong><em><span style=\"text-decoration: underline;\">I<\/span><\/em><\/strong><strong><em><span style=\"text-decoration: underline;\">S<\/span><\/em><\/strong> <strong><em><span style=\"text-decoration: underline;\">A<\/span><\/em><\/strong><strong><em><span style=\"text-decoration: underline;\">R<\/span><\/em><\/strong><strong><em><span style=\"text-decoration: underline;\">T<\/span><\/em><\/strong><strong><em><span style=\"text-decoration: underline;\">I<\/span><\/em><\/strong><strong><em><span style=\"text-decoration: underline;\">CL<\/span><\/em><\/strong><strong><em><span style=\"text-decoration: underline;\">E<\/span><\/em><\/strong> <strong><em><span style=\"text-decoration: underline;\">I<\/span><\/em><\/strong><strong><em><span style=\"text-decoration: underline;\">S<\/span><\/em><\/strong> <strong><em><span style=\"text-decoration: underline;\">T<\/span><\/em><\/strong><strong><em><span style=\"text-decoration: underline;\">O<\/span><\/em><\/strong> <strong><em><span style=\"text-decoration: underline;\">G<\/span><\/em><\/strong><strong><em><span style=\"text-decoration: underline;\">I<\/span><\/em><\/strong><strong><em><span style=\"text-decoration: underline;\">V<\/span><\/em><\/strong><strong><em><span style=\"text-decoration: underline;\">E<\/span><\/em><\/strong> <strong><em><span style=\"text-decoration: underline;\">A<\/span><\/em><\/strong> <strong><em><span style=\"text-decoration: underline;\">G<\/span><\/em><\/strong><strong><em><span style=\"text-decoration: underline;\">E<\/span><\/em><\/strong><strong><em><span style=\"text-decoration: underline;\">N<\/span><\/em><\/strong><strong><em><span style=\"text-decoration: underline;\">E<\/span><\/em><\/strong><strong><em><span style=\"text-decoration: underline;\">R<\/span><\/em><\/strong><strong><em><span style=\"text-decoration: underline;\">A<\/span><\/em><\/strong><strong><em><span style=\"text-decoration: underline;\">L<\/span><\/em><\/strong> <strong><em><span style=\"text-decoration: underline;\">I<\/span><\/em><\/strong><strong><em><span style=\"text-decoration: underline;\">D<\/span><\/em><\/strong><strong><em><span style=\"text-decoration: underline;\">EA<\/span><\/em><\/strong> <strong><em><span style=\"text-decoration: underline;\">AB<\/span><\/em><\/strong><strong><em><span style=\"text-decoration: underline;\">O<\/span><\/em><\/strong><strong><em><span style=\"text-decoration: underline;\">U<\/span><\/em><\/strong><strong><em><span style=\"text-decoration: underline;\">T<\/span><\/em><\/strong> <strong><em><span style=\"text-decoration: underline;\">G<\/span><\/em><\/strong><strong><em><span style=\"text-decoration: underline;\">AA<\/span><\/em><\/strong><strong><em><span style=\"text-decoration: underline;\">R<\/span><\/em><\/strong> <strong><em><span style=\"text-decoration: underline;\">O<\/span><\/em><\/strong><strong><em><span style=\"text-decoration: underline;\">N<\/span><\/em><\/strong><strong><em><span style=\"text-decoration: underline;\">C<\/span><\/em><\/strong><strong><em><span style=\"text-decoration: underline;\">E<\/span><\/em><\/strong> <strong><em><span style=\"text-decoration: underline;\">I<\/span><\/em><\/strong><strong><em><span style=\"text-decoration: underline;\">T<\/span><\/em><\/strong> <strong><em><span style=\"text-decoration: underline;\">I<\/span><\/em><\/strong><strong><em><span style=\"text-decoration: underline;\">S<\/span><\/em><\/strong> <strong><em><span style=\"text-decoration: underline;\">INTRODUCED IN INDIA\u201d THE LAW IS NOT YET EFFECTIVE IN INDIA<\/span><\/em><\/strong><\/span><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p style=\"text-align: justify;\"><span style=\"color: #00ccff;\"><strong><em><span style=\"text-decoration: underline;\">A<\/span><\/em><\/strong><strong><em><span style=\"text-decoration: underline;\">bb<\/span><\/em><\/strong><strong><em><span style=\"text-decoration: underline;\">r<\/span><\/em><\/strong><strong><em><span style=\"text-decoration: underline;\">e<\/span><\/em><\/strong><strong><em><span style=\"text-decoration: underline;\">v<\/span><\/em><\/strong><strong><em><span style=\"text-decoration: underline;\">i<\/span><\/em><\/strong><strong><em><span style=\"text-decoration: underline;\">a<\/span><\/em><\/strong><strong><em><span style=\"text-decoration: underline;\">t<\/span><\/em><\/strong><strong><em><span style=\"text-decoration: underline;\">i<\/span><\/em><\/strong><strong><em><span style=\"text-decoration: underline;\">o<\/span><\/em><\/strong><strong><em><span style=\"text-decoration: underline;\">n<\/span><\/em><\/strong><span style=\"text-decoration: underline;\">:<\/span><\/span> <em>G<\/em><em>e<\/em><em>n<\/em><em>e<\/em><em>r<\/em><em>a<\/em><em>l<\/em> <em>A<\/em><em>n<\/em><em>t<\/em><em>i<\/em> <em>&#8211;<\/em> <em>A<\/em><em>v<\/em><em>o<\/em><em>idance<\/em> <em>R<\/em><em>u<\/em><em>les<\/em><\/p>\n<p style=\"text-align: justify;\">Tax avoidance is a major area of concern across the world. Rules framed by different countries to minimize avoidance of tax, in simple terms are named as GAAR.<\/p>\n<h3 style=\"text-align: justify;\"><span class=\"ez-toc-section\" id=\"Methods_adopted_to_reduce_tax_liability_can_be_broadly_classified_into_four_categories\"><\/span><span style=\"color: #ff6600;\"><strong><span style=\"text-decoration: underline;\">M<\/span><\/strong><strong><span style=\"text-decoration: underline;\">e<\/span><\/strong><strong><span style=\"text-decoration: underline;\">t<\/span><\/strong><strong><span style=\"text-decoration: underline;\">h<\/span><\/strong><strong><span style=\"text-decoration: underline;\">o<\/span><\/strong><strong><span style=\"text-decoration: underline;\">d<\/span><\/strong><strong><span style=\"text-decoration: underline;\">s<\/span><\/strong> <strong><span style=\"text-decoration: underline;\">a<\/span><\/strong><strong><span style=\"text-decoration: underline;\">d<\/span><\/strong><strong><span style=\"text-decoration: underline;\">o<\/span><\/strong><strong><span style=\"text-decoration: underline;\">p<\/span><\/strong><strong><span style=\"text-decoration: underline;\">t<\/span><\/strong><strong><span style=\"text-decoration: underline;\">e<\/span><\/strong><strong><span style=\"text-decoration: underline;\">d<\/span><\/strong> <strong><span style=\"text-decoration: underline;\">t<\/span><\/strong><strong><span style=\"text-decoration: underline;\">o<\/span><\/strong> <strong><span style=\"text-decoration: underline;\">r<\/span><\/strong><strong><span style=\"text-decoration: underline;\">e<\/span><\/strong><strong><span style=\"text-decoration: underline;\">d<\/span><\/strong><strong><span style=\"text-decoration: underline;\">u<\/span><\/strong><strong><span style=\"text-decoration: underline;\">ce<\/span><\/strong> <strong><span style=\"text-decoration: underline;\">t<\/span><\/strong><strong><span style=\"text-decoration: underline;\">a<\/span><\/strong><strong><span style=\"text-decoration: underline;\">x<\/span><\/strong> <strong><span style=\"text-decoration: underline;\">l<\/span><\/strong><strong><span style=\"text-decoration: underline;\">i<\/span><\/strong><strong><span style=\"text-decoration: underline;\">a<\/span><\/strong><strong><span style=\"text-decoration: underline;\">b<\/span><\/strong><strong><span style=\"text-decoration: underline;\">i<\/span><\/strong><strong><span style=\"text-decoration: underline;\">l<\/span><\/strong><strong><span style=\"text-decoration: underline;\">i<\/span><\/strong><strong><span style=\"text-decoration: underline;\">t<\/span><\/strong><strong><span style=\"text-decoration: underline;\">y<\/span><\/strong> <strong><span style=\"text-decoration: underline;\">c<\/span><\/strong><strong><span style=\"text-decoration: underline;\">a<\/span><\/strong><strong><span style=\"text-decoration: underline;\">n<\/span><\/strong> <strong><span style=\"text-decoration: underline;\">b<\/span><\/strong><strong><span style=\"text-decoration: underline;\">e<\/span><\/strong> <strong><span style=\"text-decoration: underline;\">b<\/span><\/strong><strong><span style=\"text-decoration: underline;\">r<\/span><\/strong><strong><span style=\"text-decoration: underline;\">o<\/span><\/strong><strong><span style=\"text-decoration: underline;\">a<\/span><\/strong><strong><span style=\"text-decoration: underline;\">d<\/span><\/strong><strong><span style=\"text-decoration: underline;\">l<\/span><\/strong><strong><span style=\"text-decoration: underline;\">y<\/span><\/strong> <strong><span style=\"text-decoration: underline;\">c<\/span><\/strong><strong><span style=\"text-decoration: underline;\">l<\/span><\/strong><strong><span style=\"text-decoration: underline;\">a<\/span><\/strong><strong><span style=\"text-decoration: underline;\">s<\/span><\/strong><strong><span style=\"text-decoration: underline;\">s<\/span><\/strong><strong><span style=\"text-decoration: underline;\">i<\/span><\/strong><strong><span style=\"text-decoration: underline;\">f<\/span><\/strong><strong><span style=\"text-decoration: underline;\">i<\/span><\/strong><strong><span style=\"text-decoration: underline;\">e<\/span><\/strong><strong><span style=\"text-decoration: underline;\">d<\/span><\/strong> <strong><span style=\"text-decoration: underline;\">i<\/span><\/strong><strong><span style=\"text-decoration: underline;\">n<\/span><\/strong><strong><span style=\"text-decoration: underline;\">t<\/span><\/strong><strong><span style=\"text-decoration: underline;\">o<\/span><\/strong> <strong><span style=\"text-decoration: underline;\">f<\/span><\/strong><strong><span style=\"text-decoration: underline;\">o<\/span><\/strong><strong><span style=\"text-decoration: underline;\">u<\/span><\/strong><strong><span style=\"text-decoration: underline;\">r<\/span><\/strong> <strong><span style=\"text-decoration: underline;\">categories:<\/span><\/strong><\/span><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<ol style=\"text-align: justify;\">\n<li><span style=\"color: #00ccff;\"><strong><span style=\"text-decoration: underline;\">T<\/span><\/strong><strong><span style=\"text-decoration: underline;\">a<\/span><\/strong><strong><span style=\"text-decoration: underline;\">x<\/span><\/strong> <strong><span style=\"text-decoration: underline;\">E<\/span><\/strong><strong><span style=\"text-decoration: underline;\">v<\/span><\/strong><strong><span style=\"text-decoration: underline;\">a<\/span><\/strong><strong><span style=\"text-decoration: underline;\">s<\/span><\/strong><strong><span style=\"text-decoration: underline;\">io<\/span><\/strong><strong><span style=\"text-decoration: underline;\">n<\/span><\/strong><em><span style=\"text-decoration: underline;\">:<\/span><\/em><\/span> Illegal arrangements where tax liability is hidden or ignored. The tax payer pays less than he is legally obligated to pay by hiding income or the information from the tax authorities.<\/li>\n<\/ol>\n<ol style=\"text-align: justify;\" start=\"2\">\n<li><span style=\"color: #00ccff;\"><strong><span style=\"text-decoration: underline;\">T<\/span><\/strong><strong><span style=\"text-decoration: underline;\">a<\/span><\/strong><strong><span style=\"text-decoration: underline;\">x<\/span><\/strong> <strong><span style=\"text-decoration: underline;\">A<\/span><\/strong><strong><span style=\"text-decoration: underline;\">v<\/span><\/strong><strong><span style=\"text-decoration: underline;\">o<\/span><\/strong><strong><span style=\"text-decoration: underline;\">i<\/span><\/strong><strong><span style=\"text-decoration: underline;\">d<\/span><\/strong><strong><span style=\"text-decoration: underline;\">a<\/span><\/strong><strong><span style=\"text-decoration: underline;\">n<\/span><\/strong><strong><span style=\"text-decoration: underline;\">c<\/span><\/strong><strong><span style=\"text-decoration: underline;\">e<\/span><\/strong><strong><span style=\"text-decoration: underline;\">:<\/span><\/strong><\/span> Avoidance of tax by legal means, which would be otherwise incurred by taking advantage of some provisions or lack of provision in the law.<\/li>\n<\/ol>\n<ol style=\"text-align: justify;\" start=\"3\">\n<li><span style=\"color: #00ccff;\"><strong><span style=\"text-decoration: underline;\">T<\/span><\/strong><strong><span style=\"text-decoration: underline;\">a<\/span><\/strong><strong><span style=\"text-decoration: underline;\">x<\/span><\/strong> <strong><span style=\"text-decoration: underline;\">M<\/span><\/strong><strong><span style=\"text-decoration: underline;\">i<\/span><\/strong><strong><span style=\"text-decoration: underline;\">t<\/span><\/strong><strong><span style=\"text-decoration: underline;\">i<\/span><\/strong><strong><span style=\"text-decoration: underline;\">g<\/span><\/strong><strong><span style=\"text-decoration: underline;\">a<\/span><\/strong><strong><span style=\"text-decoration: underline;\">t<\/span><\/strong><strong><span style=\"text-decoration: underline;\">i<\/span><\/strong><strong><span style=\"text-decoration: underline;\">o<\/span><\/strong><strong><span style=\"text-decoration: underline;\">n<\/span><\/strong><strong><em><span style=\"text-decoration: underline;\">:<\/span><\/em><\/strong><\/span> Situation where the tax payer takes advantage of a fiscal incentive afforded to him by the legislation by actually submitting to the conditions and economic consequences that the particular tax legislation entails. A good example is the setting up of a business in a <a href=\"https:\/\/www.caindelhiindia.com\/blog\/corporate-updates-on-sebi-dvat-mca-sez-dgft\/\">SEZ<\/a>.<\/li>\n<\/ol>\n<ol style=\"text-align: justify;\" start=\"4\">\n<li><span style=\"color: #00ccff;\"><strong><span style=\"text-decoration: underline;\">T<\/span><\/strong><strong><span style=\"text-decoration: underline;\">a<\/span><\/strong><strong><span style=\"text-decoration: underline;\">x<\/span><\/strong> <strong><span style=\"text-decoration: underline;\">P<\/span><\/strong><strong><span style=\"text-decoration: underline;\">l<\/span><\/strong><strong><span style=\"text-decoration: underline;\">a<\/span><\/strong><strong><span style=\"text-decoration: underline;\">nn<\/span><\/strong><strong><span style=\"text-decoration: underline;\">ing:<\/span><\/strong><\/span> Arrangement of a person\u2019s business and\/ or private affairs in order to minimize tax liability.<\/li>\n<\/ol>\n<h2 style=\"text-align: justify;\"><span class=\"ez-toc-section\" id=\"GAAR_refers_to_Tax_avoidance\"><\/span><span style=\"color: #ff6600;\"><strong>*<\/strong><strong>GAAR<\/strong> <strong>r<\/strong><strong>e<\/strong><strong>f<\/strong><strong>e<\/strong><strong>r<\/strong><strong>s<\/strong> <strong>t<\/strong><strong>o<\/strong> <strong>T<\/strong><strong>a<\/strong><strong>x<\/strong> <strong>a<\/strong><strong>v<\/strong><strong>o<\/strong><strong>i<\/strong><strong>d<\/strong><strong>a<\/strong><strong>n<\/strong><strong>ce<\/strong><strong>;<\/strong><\/span><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p style=\"text-align: justify;\">GAAR is a concept which empowers the revenue authorities to deny the tax benefits which do not have any commercial substance or consideration.<\/p>\n<p style=\"text-align: justify;\">There were conflicts between tax payers whenever revenue authorities question on such transactions. In a nutshell, GAAR is a set of rules which are based on general principles to check the potential avoidance of tax in general.<\/p>\n<h3 style=\"text-align: justify;\"><span class=\"ez-toc-section\" id=\"What_are_Tax_Havens\"><\/span><span style=\"color: #ff6600;\"><strong><span style=\"text-decoration: underline;\">W<\/span><\/strong><strong><span style=\"text-decoration: underline;\">h<\/span><\/strong><strong><span style=\"text-decoration: underline;\">a<\/span><\/strong><strong><span style=\"text-decoration: underline;\">t<\/span><\/strong> <strong><span style=\"text-decoration: underline;\">a<\/span><\/strong><strong><span style=\"text-decoration: underline;\">r<\/span><\/strong><strong><span style=\"text-decoration: underline;\">e<\/span><\/strong> <strong><span style=\"text-decoration: underline;\">T<\/span><\/strong><strong><span style=\"text-decoration: underline;\">a<\/span><\/strong><strong><span style=\"text-decoration: underline;\">x<\/span><\/strong> <strong><span style=\"text-decoration: underline;\">H<\/span><\/strong><strong><span style=\"text-decoration: underline;\">a<\/span><\/strong><strong><span style=\"text-decoration: underline;\">v<\/span><\/strong><strong><span style=\"text-decoration: underline;\">e<\/span><\/strong><strong><span style=\"text-decoration: underline;\">n<\/span><\/strong><strong><span style=\"text-decoration: underline;\">s<\/span><\/strong><strong><span style=\"text-decoration: underline;\">?<\/span><\/strong><\/span><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p style=\"text-align: justify;\">Tax havens are countries which have low tax regimes which provide individuals and business opportunities of tax avoidance or tax evasion.<\/p>\n<p style=\"text-align: justify;\">There are roughly 45 tax havens in the world today. In Indian context, Mauritius is considered to be the most significant tax havens or tax evading route.<\/p>\n<p style=\"text-align: justify;\">The <em>M<\/em><em>a<\/em><em>u<\/em><em>r<\/em><em>i<\/em><em>t<\/em><em>ius<\/em> <em>r<\/em><em>o<\/em><em>u<\/em><em>t<\/em><em>e<\/em> can be described as a channel used by individuals and MNC\u2019s to evade paying taxes in India. The tax evasion in India through this route is estimated to be in tune with 55 billion dollar.<\/p>\n<h2 style=\"text-align: justify;\"><span class=\"ez-toc-section\" id=\"Implications_of_GAAR_in_India\"><\/span><span style=\"color: #ff6600;\"><strong><span style=\"text-decoration: underline;\">I<\/span><\/strong><strong><span style=\"text-decoration: underline;\">m<\/span><\/strong><strong><span style=\"text-decoration: underline;\">p<\/span><\/strong><strong><span style=\"text-decoration: underline;\">l<\/span><\/strong><strong><span style=\"text-decoration: underline;\">i<\/span><\/strong><strong><span style=\"text-decoration: underline;\">c<\/span><\/strong><strong><span style=\"text-decoration: underline;\">a<\/span><\/strong><strong><span style=\"text-decoration: underline;\">t<\/span><\/strong><strong><span style=\"text-decoration: underline;\">i<\/span><\/strong><strong><span style=\"text-decoration: underline;\">o<\/span><\/strong><strong><span style=\"text-decoration: underline;\">n<\/span><\/strong><strong><span style=\"text-decoration: underline;\">s<\/span><\/strong> <strong><span style=\"text-decoration: underline;\">o<\/span><\/strong><strong><span style=\"text-decoration: underline;\">f<\/span><\/strong> <strong><span style=\"text-decoration: underline;\">GAAR in India:<\/span><\/strong><\/span><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p style=\"text-align: justify;\">\u0095Increased litigations.<\/p>\n<p style=\"text-align: justify;\">\u0095\u00a0\u00a0\u00a0\u00a0\u00a0 Implementation of GAAR provides tremendous powers to deny tax benefit to an entity if a transaction has been carried with the sole intention of tax avoidance. Due to powers in the hand of taxmen, now innocents may be harassed by them.<\/p>\n<h3 style=\"text-align: justify;\"><span class=\"ez-toc-section\" id=\"GAAR_%E2%80%93_Example\"><\/span><span style=\"color: #ff6600;\"><strong><span style=\"text-decoration: underline;\">GAAR \u2013 Example<\/span><\/strong><\/span><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<ol style=\"text-align: justify;\">\n<li><strong>1<\/strong><strong>.<\/strong> An undertaking set up in an under developed area by putting in substantial investment of capital, carries out manufacturing activities therein and claims a tax deduction on sale of such production\/ manufacturing.<\/li>\n<\/ol>\n<p style=\"text-align: justify;\">&#8211;<em>H<\/em><em>e<\/em><em>r<\/em><em>e<\/em> <em>t<\/em><em>h<\/em><em>e<\/em><em>r<\/em><em>e<\/em> <em>is<\/em> <em>a<\/em><em>n<\/em> <em>a<\/em><em>rr<\/em><em>a<\/em><em>n<\/em><em>g<\/em><em>eme<\/em><em>n<\/em><em>t<\/em> <em>a<\/em><em>n<\/em><em>d<\/em> <em>o<\/em><em>n<\/em><em>e<\/em> <em>o<\/em><em>f<\/em> <em>t<\/em><em>h<\/em><em>e<\/em> <em>m<\/em><em>a<\/em><em>in<\/em> <em>p<\/em><em>u<\/em><em>r<\/em><em>p<\/em><em>o<\/em><em>s<\/em><em>e<\/em><em>s<\/em> <em>i<\/em><em>s<\/em> <em>a<\/em> <em>t<\/em><em>a<\/em><em>x<\/em> <em>benefit.<\/em><\/p>\n<p style=\"text-align: justify;\"><em>T<\/em><em>h<\/em><em>i<\/em><em>s<\/em> <em>is<\/em> <em>a<\/em> <em>c<\/em><em>a<\/em><em>s<\/em><em>e<\/em> <em>o<\/em><em>f<\/em> <em>t<\/em><em>a<\/em><em>x<\/em> <em>m<\/em><em>i<\/em><em>t<\/em><em>i<\/em><em>g<\/em><em>a<\/em><em>t<\/em><em>i<\/em><em>o<\/em><em>n<\/em> <em>w<\/em><em>h<\/em><em>e<\/em><em>r<\/em><em>e<\/em> <em>t<\/em><em>h<\/em><em>e<\/em> <em>t<\/em><em>a<\/em><em>x<\/em> <em>p<\/em><em>a<\/em><em>y<\/em><em>e<\/em><em>r<\/em> <em>i<\/em><em>s<\/em> <em>t<\/em><em>a<\/em><em>k<\/em><em>i<\/em><em>n<\/em><em>g<\/em> <em>a<\/em><em>d<\/em><em>v<\/em><em>a<\/em><em>n<\/em><em>t<\/em><em>a<\/em><em>g<\/em><em>e<\/em> <em>o<\/em><em>f<\/em> <em>a<\/em> <em>fiscal<\/em> <em>incentive<\/em> <em>offered<\/em> <em>to<\/em> <em>him<\/em> <em>by<\/em> <em>submitting<\/em> <em>to<\/em> <em>the<\/em> <em>conditions<\/em> <em>and<\/em> <em>economic<\/em> <em>consequences<\/em> <em>of<\/em> <em>the<\/em> <em>provisions<\/em> <em>in<\/em> <em>the<\/em> <em>legislation.<\/em> <em>So<\/em> <em>this<\/em> <em>would<\/em> <em>not<\/em> <em>invoke<\/em> <em>GAAR.<\/em><\/p>\n<ol style=\"text-align: justify;\" start=\"2\">\n<li>2. A business sets up a factory for manufacturing in an under developed tax exempt area. It then diverts its production from other connected manufacturing units and shows the same as manufactured in the tax exempt unit (while doing only process of packaging there).<\/li>\n<\/ol>\n<p style=\"text-align: justify;\">&#8211;<em>H<\/em><em>e<\/em><em>r<\/em><em>e<\/em> <em>t<\/em><em>h<\/em><em>e<\/em><em>r<\/em><em>e<\/em> <em>is<\/em> <em>a<\/em><em>n<\/em> <em>a<\/em><em>r<\/em><em>r<\/em><em>a<\/em><em>n<\/em><em>g<\/em><em>e<\/em><em>me<\/em><em>n<\/em><em>t<\/em> <em>a<\/em><em>n<\/em><em>d<\/em> <em>t<\/em><em>h<\/em><em>e<\/em><em>r<\/em><em>e<\/em> <em>is<\/em> <em>a<\/em> <em>t<\/em><em>a<\/em><em>x<\/em> <em>b<\/em><em>e<\/em><em>n<\/em><em>e<\/em><em>f<\/em><em>it.<\/em> <em>T<\/em><em>h<\/em><em>e<\/em> <em>t<\/em><em>r<\/em><em>a<\/em><em>n<\/em><em>s<\/em><em>a<\/em><em>c<\/em><em>t<\/em><em>ion<\/em> <em>lacks<\/em> <em>commercial<\/em> <em>substance<\/em> <em>and<\/em> <em>there<\/em> <em>is<\/em> <em>misuse<\/em> <em>of<\/em> <em>the<\/em> <em>tax<\/em> <em>provisions<\/em> <em>and<\/em> <em>thus<\/em> <em>revenue<\/em> <em>would<\/em> <em>invoke<\/em> <em>GAAR.<\/em><\/p>\n<p style=\"text-align: justify;\">The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.<\/p>\n<p style=\"text-align: justify;\">Hope the information will assist you in your Professional endeavors. For query or help, contact:<a href=\"mailto:singh@carajput.com\">singh@carajput.com<\/a>\u00a0or call at 9555555480<\/p>\n<p style=\"text-align: justify;\">\n","protected":false},"excerpt":{"rendered":"<p>GENERAL ANTI &#8211; AVOIDANCE RULES GAAR NOTE&#8211;\u201cTHIS ARTICLE IS TO GIVE A GENERAL IDEA ABOUT GAAR ONCE IT IS INTRODUCED IN INDIA\u201d THE LAW IS NOT YET EFFECTIVE IN INDIA Abbreviation: General Anti &#8211; Avoidance Rules Tax avoidance is a major area of concern across the world. Rules framed by different countries to minimize avoidance &hellip;<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[9],"tags":[3419,3421,3420,3417,1741,3418],"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/carajput.com\/blog\/wp-json\/wp\/v2\/posts\/465"}],"collection":[{"href":"https:\/\/carajput.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/carajput.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/carajput.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/carajput.com\/blog\/wp-json\/wp\/v2\/comments?post=465"}],"version-history":[{"count":5,"href":"https:\/\/carajput.com\/blog\/wp-json\/wp\/v2\/posts\/465\/revisions"}],"predecessor-version":[{"id":18983,"href":"https:\/\/carajput.com\/blog\/wp-json\/wp\/v2\/posts\/465\/revisions\/18983"}],"wp:attachment":[{"href":"https:\/\/carajput.com\/blog\/wp-json\/wp\/v2\/media?parent=465"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/carajput.com\/blog\/wp-json\/wp\/v2\/categories?post=465"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/carajput.com\/blog\/wp-json\/wp\/v2\/tags?post=465"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}