Which of the statements given below is/are correct ?
- 1. In India, the provisions of General Anti-Avoidance Rule (GAAR) will be implemented with effect from 1 April 2015
- 2. The provisions of GAAR were aimed at checking tax avoidance by overseas investors
Select the correct answer using the code given below :
1 only
2 only
Both 1 and 2
Neither 1 nor 2
Answer is Wrong!
Answer is Right!
This question was previously asked in
UPSC CAPF – 2014
Statement 2 is correct. While GAAR is applicable to all taxpayers (both residents and non-residents) engaging in tax avoidance arrangements, a significant part of the concern it aimed to address was tax avoidance by overseas investors structuring their investments or transactions in India to exploit tax treaties or other loopholes. Thus, checking tax avoidance by overseas investors was indeed one of the aims of the GAAR provisions.
– GAAR’s purpose: Counter aggressive tax planning and arrangements whose main purpose is to obtain a tax benefit.
– GAAR applies to: Any taxpayer (resident or non-resident).