It said adequate procedural safeguards are in place to ensure that General Anti-Avoidance Rules (GAAR), which seek to prevent companies from routing transactions through other countries to avoid taxes, are invoked in "a uniform, fair and rational manner". The new rules give tax authorities the right to scrutinise and tax transactions which they believe are structured solely to avoid taxes. This essentially means that any transaction that carries a tax benefit could be questioned. CBDT said the adoption of anti-abuse rules in tax treaties may not be sufficient to address all tax avoidance strategies and the same are required to be tackled through domestic anti-avoidance rules. "One good thing is that CBDT has clarified that if LoB sufficiently addresses tax avoidance then GAAR will not apply.

Source: dna January 27, 2017 15:17 UTC