Legitimate Tax Planning - Does it Survive under GAAR regime?

Episode Duration:
90 minutes.

Episode Background:

British Politician Denis Healey once said, “The difference between tax avoidance and tax evasion is the thickness of a prison wall.” Time & again, judicial authorities have clearly held that while tax avoidance within the four corners of the law is legitimate, tax evasion is not. While tax authorities have left no stone unturned in identifying and plugging tax evasion strategies, over a period of time, taxpayers have managed to find loopholes and implement elaborate strategies and complex structures to plan their taxes.

Against this backdrop, particularly w.r.t the introduction of General Anti-Avoidance Rules (GAAR) in India vide Finance Act, 2012, it can be termed as a ‘watershed event’ in the evolution of India’s tax policy and legislation, as any discussion on structuring of a transaction or an arrangement would be incomplete without debating its potential exposure to the provisions of GAAR. From an international perspective, it is pertinent to note that GAAR has been enacted in some countries such as Australia, the Netherlands, Canada, New Zealand, China, Poland, the United Kingdom, the United States, France and Germany, and over the years, some of these countries have developed and implemented jurisprudence on the subject.

What shall the episode cover?

In this regard, Taxsutra in conjunction with Mr. PVSS Prasad (Chartered Accountant) is glad to present a special episode on the question of, “Whether Legitimate Tax Planning Survives under GAAR regime?” Over the course of this episode, Mr. Prasad has dived deep into the provisions of Sec. 96 of the Income-Tax Act [dealing with Impermissible Avoidance Arrangement] and has covered several nuances associated with the said topic which includes the following:

1. Discussion around "Substance" v/s "Form"  
2. Should there be a line of demarcation between tax avoidance supported by legitimate tax planning and another one by abuse of provisions?
3. Instances & Ramifications where an assessee omits both the “letter” and “spirit” of the law to avail a tax benefit and comes under the GAAR Scanner
4. Whether judicial doctrines laid down by the Apex court are intact?
5. Perspective on what is happening in international countries [such as Canada, New Zealand, Australia] where GAAR exists for over 2 decades, while also touching upon the Canadian Federal Court Ruling in case of Alta Energy   
6. Interplay between GAAR vs Principal Purpose Test
7. Can a taxpayer himself opt to be governed by GAAR instead of PPT?