The General Anti –Avoidance Rule (GAAR) of India had been scheduled to be implemented from April 2014. After further consultation the provisions will however now come into effect from April 1, 2016 and these provisions would be used to target only those transactions where the sole intent was to avoid tax.
Foreign institutional investors (FIIs) will be excluded from GAAR provisions in cases where they do not advantage of the benefits of double tax avoidance agreements of India with other nations. If however an FII derives benefits from a double-taxation treaty, GAAR will override the treaty.
