A number of countries have provided for General Anti Avoidance Rules (GAAR) in matters relating to taxation.
The following decisions have been taken by Government:.
- Investments made before August 30, 2010, the date of introduction of the Direct Taxes Code, Bill, 2010, will be grandfathered.
- GAAR will not apply to such FIIs that choose not to take any benefit under an agreement under section 90 or section 90A of the Income-tax Act, 1961. GAAR will also not apply to non-resident investors in FIIs.
- A monetary threshold of Rs. 3 crore of tax benefits in the arrangement will be provided in order to attract the provisions of GAAR.
Further, having considered all the circumstances and relevant factors, Government has also decided that the provisions of Chapter X-A will come into force with effect from April 1, 2016 (as against the current provision of April 1, 2014).
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