Please find our Newsflash on the recent clarification issued by the Central Board of Direct Taxes (CBDT) vide Notification Nos. 54/2026 and 55/2026 dated 31 March 2026, concerning the applicability of General Anti-Avoidance Rules (GAAR).
The Supreme Court, in the Tiger Global ruling, had earlier held that GAAR could apply based on the timing of tax benefit and not merely the date of investment, thereby creating uncertainty around the grandfathering of investments made prior to 1 April 2017.
In this regard, the CBDT has now amended the relevant rules to clarify that income arising from the transfer of investments made before 1 April 2017 shall not be subject to GAAR. Further, the Explanatory Memorandum to the amendment to Rule 10U indicates that GAAR provisions shall not be invoked on or after the date of notification.
While the notification provides significant clarity, taxpayers should continue to be mindful that other anti-abuse provisions, including judicial anti-avoidance principles and the Principal Purpose Test, may still be relevant depending on the facts and circumstances. Additionally, the applicability of the said amendment to ongoing proceedings may need to be evaluated.

Click Here To Download -RSM India Newsflash – CBDT clarifies that investments made prior to 1 April 2017 will not be subject to GAAR