ECONOMICS

Detailed explanation-1: -Specific anti-avoidance rules is anti-tax avoidance regulation that specifically stipulates provisions to prevent certain types of tax avoidance. An example of SAAR in preventing TP is the provision of an arm’s length price and advance pricing agreement.

Detailed explanation-2: -Specific Anti-Avoidance Rules (SAAR) These rules are intended to deny the benefit of a loss, relief or exemption which may otherwise be available. When a particular type of transaction or series of transactions are undertaken.

Detailed explanation-3: -The Transfer Pricing (TP) Regulations were introduced in India in the year 2001, in order to prevent erosion of Indian tax base. The Indian TP Regulations are contained in Chapter X of the Income-tax Act, 1961 (“the Act”) under the title “Special Provisions relating to avoidance of tax”.

Detailed explanation-4: -Through Transfer Pricing, corporations located in high-tax jurisdictions can “transfer the prices” of income and expenses and shift their income to a low-tax jurisdiction in order to avoid or reduce taxation.

Detailed explanation-5: -The GAAR provisions come under the Income Tax Act, 1961. The Department of Revenue under the Finance Ministry frames the rules under GAAR. It is specifically aimed at cutting revenue losses that happen to the exchequer due to aggressive tax avoidance measures practiced by companies.