Gaar emerges as key tool in tax enforcement

The Supreme Court’s interpretation of the General Anti-Avoidance Rule (Gaar) in the Tiger Global case has reinforced its position as a core instrument in India’s tax enforcement framework, prompting taxpayers to reassess both existing structures and future transactions.

- MONIKA YADAV

Gaar allows tax authorities to deny tax benefits if a transaction is primarily designed to avoid tax, and lacks real commercial substance.

“The Supreme Court’s ruling in the Tiger Global case is a defining moment in India’s international tax jurisprudence, and is poised to influence future application of tax treaties and structuring of cross-border arrangements,” said Richa Sawhney, tax partner, Grant Thornton Bharat. She added that “taxpayers may need to evaluate their existing arrangements in light of the principles laid down by this decision”.