GAAR — general anti-avoidance rules: how much of this can I do myself?
Some of it, yes — and we will say so on the call if that is the honest answer. The parts that are worth paying for are the ones where a missed election, a missed deadline or an unverified threshold costs more than the fee: the rules apply where an arrangement lacks commercial substance or creates rights and obligations not ordinarily created at arm's length.
What if I have already filed and got it wrong?
That is a common starting point. We re-derive the position, identify whether an amendment or a disclosure route is the right vehicle, and tell you which one preserves the relief that is still available. The order matters more than the speed.
How long will it take?
It depends on the documents rather than on us. Once the pack is complete most filings turn around inside a fortnight; anything that needs a certificate from a tax authority runs on that authority's timetable, which we tell you at the start rather than at the end.
What is GAAR and when can the Indian department apply it?
It is a general rule that lets the department look at the purpose and the substance of an arrangement rather than only at its legal form. Where the main purpose of an arrangement was to obtain a tax benefit, and the arrangement either lacks commercial substance or creates rights and obligations that would not ordinarily be created between parties dealing at arm's length, the arrangement can be recharacterised for tax purposes. Recharacterised means taxed as what it is treated as being, rather than as what the documents say it is. Compliance with each individual provision does not by itself answer the question.
Every step we took was legal — can GAAR still apply?
Yes, and that is the point of the rule. The question it asks is not whether each step complied with the law, but whether the arrangement taken as a whole was mainly there to produce a tax benefit and whether it has commercial substance. A chain of individually valid steps that together achieve nothing a business would otherwise do is exactly the target. The defence is not a better legal opinion on the steps. It is evidence, written at the time, of the commercial reasons for doing it that way.
How do we show our structure has commercial substance?
By showing what it does other than reduce tax. Substance is found in the rights and obligations actually created and actually exercised: decisions taken where the structure says they are taken, functions and people behind each entity, money moving for reasons that make business sense, and terms of the kind unrelated parties would agree. The supporting paper should be contemporaneous — board papers, the advice that was considered, the alternatives rejected and why, and the commercial problem the structure solved. Assembled after the event, the same points read as reconstruction rather than as evidence.
What does contemporaneous documentation actually mean here?
Written when the decision was made, by the people who made it, for a purpose other than defending it later. Board minutes recording the commercial question and the options weighed. Internal papers analysing the business case. Correspondence with counterparties. The valuation or forecast actually relied on at the time. A memorandum written after a notice arrives can be entirely accurate and still carry far less weight, because it was written knowing what needed to be proved. The practical habit is to build the file at the point of the transaction and keep it with the transaction documents.
We restructured years ago and kept little paperwork — what now?
Work with what exists rather than manufacturing what does not. Correspondence, board packs, bank records, valuations, advisers' notes and the commercial events of that period are often enough to establish what the business was doing and why. Assemble them into a file that sets out the arrangement, the commercial drivers behind it and the evidence for each, and be candid in that file about where the evidence is thin. An honest file with gaps in it is defensible. A tidy narrative written today with nothing behind it is not.
Is getting a tax benefit enough on its own for GAAR to apply?
A tax benefit is the entry point, not the conclusion. The rule is aimed at arrangements whose main purpose was that benefit and which then fail on substance, having no commercial rationale or creating rights and obligations that parties at arm's length would not ordinarily create. An arrangement can produce a tax advantage and still stand, where it was done for reasons a business would recognise and those reasons are evidenced. The exposure sits with arrangements where the tax outcome is the only thing the structure actually achieves.
Who is an NRI for tax purposes?
Residence in India is decided by days present in the tax year, with a second limb that also counts days over the preceding four years, and separate rules for Indian citizens leaving for employment. Fall outside the tests and you are non-resident, taxed in India only on Indian-source income. Between full residence and non-residence sits RNOR — resident but not ordinarily resident — which shelters foreign income for a limited window after returning. See RNOR status.
What is TCS on foreign remittance?
Tax collected at source. When a resident individual remits money abroad under the Liberalised Remittance Scheme — or buys an overseas tour package — the bank or seller collects an amount of tax on top and deposits it against your PAN. It is not a cost and it is not a final tax: it appears in your annual tax statement and is set off against the tax on your return, with the excess refunded. The rates and the purposes they attach to have been amended repeatedly, so we confirm them for the remittance year. See LRS limits and TCS.
