The Central Board of Direct Taxes (CBDT) has revised income tax regulations to offer clarity on the implementation of General Anti-Avoidance Rules (GAAR). The amendment specifies that GAAR will not be enforced on income generated from investments made before April 1, 2017, with the change set to take effect from April 1, 2026.
This move is anticipated to bring assurance to investors, particularly concerning older investments, as it distinctly outlines the extent of GAAR provisions. The adjustment comes in the wake of a recent Supreme Court judgment involving Tiger Global International, a Mauritius-based entity, affirming the Income Tax Department’s authority to levy taxes on gains from its exit from Flipkart in 2018.
The alteration is viewed as part of the government’s broader strategy to harmonize anti-avoidance measures with the necessity for a consistent and foreseeable tax structure. Additionally, a new income tax law has been implemented from the current fiscal year, replacing the longstanding 1961 legislation and introducing modifications in compliance, terminology, and taxation.
