GENERAL KNOWLEDGE

Detailed explanation-1: -General Anti Avoidance rule (GAAR) is a set of rules or a framework which helps the revenue authorities decides whether a particular transaction has commercial substance or not. If it does not have commercial substance and is not a genuine transaction then what should be the tax liability associated with it.

Detailed explanation-2: -General Anti-avoidance Rule (GAAR) is a concept which generally empowers the Revenue Authority in a country to deny tax benefit of transactions or arrangements which do not have any commercial substance and the only purpose of such a transaction is achieving the tax benefit.

Detailed explanation-3: -GAAR applies to any arrangement that is considered an Impermissible Avoidance Arrangement (IAA). Furthermore, under its provisions, certain transactions are deemed to lack commercial substance. GAAR is not merely restricted to cross-border transactions, but also applies to domestic arrangements.