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GAAR AND DTAA (MODIFICATIONS DONE IN GAAR RULES (LOB CLAUSE (LIMITATION OF…
GAAR AND DTAA
MODIFICATIONS DONE IN GAAR RULES
GRANDFATHERING CLAUSE: GAAR TO APPLICALE WEF FROM 2017 NOT RETROSPECTIVELY
INVOKING OF GAAR PRINCIPLE ON TRANSACTIONS ABOVE 3 CRORE RUPPES
REVISION OF DTAA WITH MAURITUS, SINGAPORE AND CYPUS
FIRST APPROVAL FOR GAAR PRINCIPLE BY PRINCIPAL COMMISSIONER
SECOND APPROVAL FOR A PANEL HEAD BY HC JUDGE
LOB CLAUSE
LIMITATION OF BENEFIT CLAUSE
FORGIEN INVESTOR CLAMING TAX EXEMPTION SHOULD PRODUCE DOCUMENT THAT HE IS RESIDENT OF AID FORIGN COUNTRY
SOME EMPLOYMENT AND SPENDING IS ALSO DONE BY THAT COMPANY
LIMITATION IN BENEFITS OF TAX EXEMPTION CLAIMED LIKE 7.5%
POEM: PLACE OF EFFECCTIVE MANAGMENT
REQUIRES FORIEGN FIRMS TO PAY TAXES ININDIA IF THERE EFFECTIVE CONTROL OF BUSINESS LIES IN INDIA
INTRODUCTION:
GAAR : GENERAL ANTI AVOIDANCE RULE:
IT SEEKS TO PREVENT TAX AVOIDANCE AND EVASION BY TRANSACTING TO SOME OTHER COUNTRIES WITH WHOM INDIA HAVE DTAA: TREATY SHOPPING
FOR EXAMPLE VODAFONE AND HUTCHISON DEAL IN CAYMEN ISLANDS AND AVOIDED ~ 12000 CRORE CAPITAL GAINS TAX
DIFFRENT WAYS USED BY COMPANIES TO REDUCE TAX LAIBILTY
TAX PLANNING: A LAWFUL ARRANGEMENT TO REDUCE THE TAX LAIBILTY LIKE SEC 80 C OF IT ACT
TAX MITIGATION: PLOUGHING BACK OF PROFITS BY REINVESTMENT
SO TO REDUCE NET PROFIT ON WHICH TAX IS TO BE PAID
TAX AVOIDANCE: LEGAL USE OF LAW - BUT IT MAY NOT BE AS PER INTENT OF LAW... DTAA AND ROUND TRIPPING OR VODAFONE ISSUE
TRANSFER PRICING IS ALSO A MECHANISM FOR TAX AVOIDANCE.. IT IS CORRECTED BY ADAVNCE PRIVCING MECHANSISM (APA)
TAX AVOIDANCE IS DOME THROUGH TREATY SHOPING WHICH IS CHECKED BY GAAR
TAX EVASION: ILLEGAL MEANS TO REDUCE TAX LAIBILITY: HAWALA TRANSACTION
PARASHARTHY SHOME PANEL WAS FORMULATED TO MAKE RULE ON GAAR IN 2012
GAAR WAS APPLIED ON 1ST APR 2017
THE DELAY BECOZ OF FEAR TO FLYING OFF OF FORGIEN INVESTMENT