- GAAR implementation date: 1 April 2017. - GAAR's purpose: Counter aggressive tax planning and arrangements whose main purpose is to obtain a tax benefit. - GAAR applies to: Any taxpayer (resident or non-resident).
It is used to adjust the purchase price of an asset for inflation when calculating long-term capital gains. - The CII for a financial year is typically higher than that of the previous financial year, reflecting the general trend of inflation. Given the inflationary environment in India around 2013, it is highly likely that the CII for 2013-14 was higher than that for 2012-13. - The purpose of indexation using CII is to account for the decrease in the purchasing power of money due to inflation. By indexing the cost of acquisition and improvement, the taxable capital gain is reduced, as it accounts for only the real gain over and above inflation. This directly reduces the long-term capital gains tax liability for the taxpayer. 384. Which of the statements given below is/are correct ? 1. In India, the provisions of General Anti-Avoidance Rule (GAAR) will be implemented with effect from 1 April 2015 2. The provisions of GAAR were aimed at checking tax avoidance by overseas investors Select the correct answer using the code given below :
Asked in UPSC CAPF 2014 · Topic: Fiscal Policy & Revenue (Taxation System in India: Direct, Indirect taxes, and Tax Reforms (including GST))
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