Two-year GAAR respite will help tackle irritants
Arrangements, where tax advantage is only one of the purposes or merely incidental would be spared. Thus, transactions structured with an eye on a tax benefit will now not attract GAAR if the main commercial purpose of the transaction can be demonstrated. This would also imply that choosing one option out of the many available under law would not be frowned upon merely because the option chosen was more tax efficient.
The proposed reconstitution of the approving panel to supervise GAAR-related cases is likely to restore confidence in the independence of the panel. The inclusion of a sitting or retired high court judge as its chairperson and an independent subject matter expert as a member would bring the much-needed balance in the panel and will be a deterrent to indiscriminate invocation. One development of some concern is making the directions of the approving panel binding on the tax payer also. The taking away of tax payer’s remedy to appeal to the appellate tribunal may have been provoked by the change in the constitution of the approving panel, which is certainly more independent and unlikely to be biased in favor of revenue. Also, with the inclusion
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