Q. Consider the following statements regarding the General Anti-Avoidance Rule (GAAR):
Select the correct answer using the code given below:
Q. Consider the following statements regarding the General Anti-Avoidance Rule (GAAR):
Select the correct answer using the code given below:
The correct option is A 1 only
Explanation:
Statement 1 is correct: The General Anti Avoidance Rule (GAAR) is a set of rules which helps the revenue authorities decide whether a particular transaction has commercial substance or not. This is used to assess if a transaction has any merit or has been conducted purely for tax avoidance. The GAAR provisions come under the Income Tax Act, 1961. GAAR was initially proposed in the Direct Tax Code 2009, although it was introduced in India in the Budget session of Parliament in 2012. It came into effect in 2017 and is applicable from the assessment year 2018 – 19.
Statement 2 is incorrect: A committee under Parthasarathi Shome was set up to review the proposals. The Akhilesh Ranjan committee was appointed for drafting a new Direct Tax Law.
Explanation:
Statement 1 is correct: The General Anti Avoidance Rule (GAAR) is a set of rules which helps the revenue authorities decide whether a particular transaction has commercial substance or not. This is used to assess if a transaction has any merit or has been conducted purely for tax avoidance. The GAAR provisions come under the Income Tax Act, 1961. GAAR was initially proposed in the Direct Tax Code 2009, although it was introduced in India in the Budget session of Parliament in 2012. It came into effect in 2017 and is applicable from the assessment year 2018 – 19.
Statement 2 is incorrect: A committee under Parthasarathi Shome was set up to review the proposals. The Akhilesh Ranjan committee was appointed for drafting a new Direct Tax Law.
