mumbai the general antiavoidance rule gaar provisions will apply from the financial year 201718 without any further deferral despite lobbying efforts by many stakeholders past budgets had deferred implementation of gaargaar will also override the provisions of tax treaties entered into by india with other countries in fact the recently signed protocol with singapore explicitly mentioned a treaty overrideif at all budget 2017 could propose an increase in the threshold limit income tax it rules currently provide that gaar will apply to tax avoidance arrangements or transactions where the tax benefit arising to all parties concerned exceeds rs 3 crore in the aggregate in june last year it rules were also amended under which income from transfer of investments made prior to april 1 2017 will not be covered by gaar provisions it should be noted that only income from transfer of investments is covered and not any other tax planning arrangementa section of foreign investors are apprehensive as regards treaty override which means that the beneficial provisions of the tax treaty do not apply in cases of treaty abuse covered by gaar punit shah partner dhruva advisors says the cbdt should clarify that wherever specific antiavoidance regulations saar are specified either in the it act such as transfer pricing provisions or in tax treaties such as limitation of benefit clause gaar should not apply compliance with saar should be sufficient to qualify as a genuine business arrangement for eg the revised treaties india signed with mauritius and singapore have stringent limitation of benefit clauses however it appears that as of now the mof is sticking to its stand relating to treaty overridewhile india inc was seeking a further deferral of gaar provisions especially since final guidelines have still not been issued government officials say the guidelines will follow soon after the finance act 2017 is enactedsome recommendations of the shome committee are likely to be adopted in the final set of guidelines say government sources the committee had highlighted various scenarios where gaar should not apply such as existence of tax holiday benefits or merger between a profit and lossmaking company with high court approval it also said that the onus of proof that the transaction is abusive should rest with the tax authorities and not the taxpayer sudhir kapadia tax leader at ey india says that gaar should be invoked by tax officials only in rare cases to deal with highly aggressive egregious and artificial preordained schemes it should not come in the way of the right of the taxpayer to choose and make commercial decisions such as financing by debt versus equity or form business say company versus a limited liability partnership