Round Trip Financing in Impermissible Avoidance Agreement
Tax avoidance is one of the main concerns around the world. Different countries have formulated different rules to minimize this tax avoidance. These rules are known in simple terms as the General Anti-Avoidance Rule (GAAR). The GAAR is therefore nothing more than the set of rules that have been ratified to control tax evasion. 7. On 27 September 2013, the GAAR would apply to foreign institutional investors who have not benefited from an agreement under Article 90 or Article 90A of The I-T Act or the Double Taxation Convention (DTAA), in the opinion of the Government of India. b. treat the annulment agreement as if it had not been concluded or implemented; 1. March 16, 2012: Finance Minister Pranab Mukherjee makes a difficult decision and announces that the government will reduce tax avoidance starting in fiscal year 2012-2013.
The proposal shall be the subject of mutual agreement if it is adopted and an agreement is reached accordingly. Whether the fund involved in financing the tour is understandable or not. – X Ltd. the profitable company takes out a loan from the bank even if it has sufficient funds, X Ltd. uses the amount of the bank loan for the business and then grants a loan from its available fund to Y Ltd. (sister company), a loss-making company at a lower/free interest rate (regardless of whether the loan issued by X Ltd. to Y Ltd. does not have the funds available and uses bank loans in transactions that are traceable). * The time or order in which funds involved in round-trip funding are transferred or received; or For § 97 paragraph 1 letter b in conjunction with § 97 paragraph 2 are some examples of round-trip financing: 1. Article 95 paragraph 1: Notwithstanding what is contained in the law, an agreement entered into by an appraiser may be declared an ineligible avoidance arrangement and the resulting tax consequences may be determined subject to the provisions of this Chapter X-A.
* Whether funds involved in tour funding can be traced back to funds transferred or received from a party under the agreement (i) cancel abusive tax avoidance agreements that result in loss of revenue; Inadmissible cancellation agreement. An inadmissible annulment agreement is one which involves general measures to combat tax evasion in accordance with the Gaar regulations. These arrangements are specifically designed by the institutions/individuals in such a way as to avoid a tax. Time or order is not relevant to the funds involved in round-trip financing. UNDERSTAND; The word means something very different from a binding treaty based on the rule of law; the word means at most a gentleman`s agreement. The government, whether central or state, levies taxes on citizens to finance their activities by imposing various laws and procedures. The laws, rules and regulations by which the government collects taxes offer some relief, deductions and, of course, there are loopholes and individuals are allowed to plan their transactions in accordance with the rules and regulations to save tax. Tax planning is authorized by the government, not tax avoidance and evasion.
(iii) adopt appropriate provisions for the examination of cases of tax evasion and planning; Article 96(1): An inadmissible cancellation system must be understood as an arrangement the main objective of which is to obtain a tax advantage, namely a tax advantage. . . .