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THE GAAR & INCOME TAX REGULATIONS

INTRODUCTION:
GAAR stands for “General Anti-Avoidance rule. Countries impose taxes on various types with the objective of raising revenue for Government spending. Taxpayers may be expected to minimize their tax liabilities by arranging their affairs in a manner that is termed tax efficient i.e. through tax mitigation. GAAR:
Tax avoidance is the legal usage of the tax regime to one's own advantage, to reduce the amount of tax that is payable by means that are within the law. Its original use was by tax advisers as an alternative to the pejorative term tax avoidance. Most countries impose taxes on income earned or gains realized within that country regardless of the country of residence of the person or firm. Most countries have entered into bilateral double taxation treaties with many other countries to avoid taxing nonresidents twice—once where the income is earned and again in the country of residence, however there are relatively few double-taxation treaties with countries regarded as tax havens.

INCOME TAX:
The government of India imposes an income tax on taxable income of all persons including individuals, Hindu Undivided Families (HUFs), companies, firms, association of persons, body of individuals, local authority and any other artificial judicial person. Levy of tax is separate on each of the persons. The levy is governed by the Indian Income Tax Act, 1961. The Indian Income Tax Department is governed by CBDT and is part of the Department of Revenue under the Ministry of Finance, Govt. of India. Income tax is a key source of funds that the government uses to fund its activities and serve the public.

GAAR and TAX REGULATIONS IN INDIA:
GAAR IN INDIA:
The Prime Minister constituted an Expert Committee on General Anti Avoidance Rules (GAAR) to undertake stakeholder consultations and

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