A Tale of Two Tax Systems: A Comparative Analysis of General Anti-Avoidance Rules Provisions in India and Australia

This paper presents a comparative study of General Anti-Avoidance Rules (GAAR) in India and Australia. GAAR provisions are designed to prevent individuals and corporations from using tax laws to avoid paying taxes. The paper explores the statutory provisions and judicial decisions of both countries to understand the nuances of the principle of anti-avoidance. While the objectives of GAAR provisions in both countries are similar, the scope and application of the provisions differ significantly. The Indian provisions apply to all arrangements, while the Australian provisions only apply to schemes. Additionally, the Indian GAAR provisions require the arrangement to lack commercial substance, while the Australian provisions do not require such a test. The paper also examines the judicial interpretations of GAAR provisions in both countries. The Indian courts have adopted a more restrictive approach, while the Australian courts have adopted a more liberal approach. The paper concludes that a case-by-case approach is necessary in the application of GAAR provisions, taking into account the specific facts and circumstances of each situation.