Q. With regards to the General Anti-Avoidance Rule (GAAR), consider the following statements:

Which of the statements given above is/are correct?

1 and 3 only

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2 and 3 only

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2 only

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1 and 2 only

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Solution

The correct option is C 2 only
Explanation:

Statement 1 is incorrect: The GAAR provisions come under the Income Tax Act, 1961. The Department of Revenue under the Finance Ministry frames the rules under GAAR.

Statement 2 is correct: GAAR investigates the imposition of taxes on those types of arrangements that are chiefly aimed to avail a tax benefit or those that don’t have any commercial substance.

Statement 3 is incorrect: GAAR came into effect in 2017 and is applicable from the assessment year 2018-19.

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