GAAR is set of rules aimed to check tax avoidance. It is set of regulations that is aimed to check unacceptable tax avoidances. Some of the GAAR provisions became effective in India from April 1, 2017 onwards.
Significance of GAAR is that it tries to punish those type of avoidance that are purposefully designed to avoid taxes without having any economic motive. Tax avoidance is legal; but now, large scale revenue loss is occurring due to aggressive tax planning by corporate using avoidance opportunities. Governments in many countries are introducing anti- avoidance rules to check this revenue loss from excessive avoidance.
