Central Board of Direct Taxes Clarifies General Anti-Avoidance Rules Provisions

On the 31st of March 2026, the Central Board of Direct Taxes (CBDT) in India has issued amendments to the Income-tax Rules, 1961 (Old Rules) as well as the Income-tax Rules, 2026 (New Rules) to provide reassurance and certainty to the international investor community on the application of the General Anti-Avoidance Rules (GAAR), particularly concerning investments made prior to 1 April 2017.

Key Highlights

• Grandfathering of pre-2017 investments reinforced
  Income arising from the transfer of investments made before 1 April 2017 is now explicitly excluded from GAAR, irrespective of when the tax benefit is realised.
  
  
• Greater legal certainty for investors
  The amendment embeds this protection directly within the rules, strengthening earlier guidance and providing clear statutory backing.
  
  
• GAAR remains applicable post-2017
  Investments made on or after 1 April 2017 continue to be subject to GAAR, where arrangements meet the criteria of an impermissible avoidance arrangement.

Implications

This key development enhances predictability and investor confidence, particularly for legacy structures involving India. This is a positive and welcome development for global investors, including those structuring investments into India through international financial centres such as Mauritius.