30+ years of combined expertise in complex Indian taxation and compliance.
Discuss your unique tax situation with our senior partners. No obligation.
30+ years of combined expertise in complex Indian taxation and compliance.
Structures lacking demonstrable commercial substance are dismantled by the Indian Revenue under GAAR. We audit vulnerabilities, align group architectures with OECD BEPS action plans, and secure your global positions against hostile re-characterization.
Ideal for: Multinational Enterprises, Funds with Intermediate Holding Companies, and Complex Cross-Border JVs.
Under the General Anti-Avoidance Rules (GAAR), the burden is on the taxpayer to prove that obtaining a tax benefit was NOT the main purpose of an arrangement. The Department possesses extraordinary powers to re-characterize equity as debt, deny treaty benefits, and disregard corporate entities entirely.
Routing capital through zero-tax or treaty-friendly jurisdictions (e.g., Mauritius, Singapore) using shell entities that lack physical office space, local payroll, or real decision-making power.
Department Action: The holding entity is disregarded, and tax is assessed as if the ultimate parent invested directly.
Exporting Indian capital to an offshore holding company, only to bring it back as Foreign Direct Investment (FDI) to claim tax holidays, treaty exemptions, or obscure true shareholder identities.
Department Action: The transaction is mapped as a single domestic flow, attracting maximum penal taxation.
Transferring intangibles, brands, or highly appreciated intellectual property to low-tax jurisdictions right before a liquidity event or public listing to avoid Indian capital gains.
Department Action: The offshore transfer is deemed void, and Indian tax is levied on the entire exit value.
Extracting profits from an Indian subsidiary not through declared dividends (which attract withholding tax), but via artificially inflated royalties, management fee cross-charges, or interest on aggressive debt instruments.
Department Action: Payments are re-characterized as dividends, disallowances are made, and heavy penalties are applied.
We subject your existing holding and transactional structures to 'The Principle Purpose Test'. We independently assess if your foreign intermediate entities hold sufficient local employees, office space, and independent directors.
Synchronizing your operational reality with OECD BEPS mandates. We ensure that your taxable profits are aligned linearly with where actual value creation (functions, assets, risks) occurs across the multinational group.
Writing the definitive 'Defense File'. We build robust, contemporaneous evidentiary trails proving the non-tax commercial reasons for every acquisition, capital structure, and significant cross-border lease.
"Our legacy Mauritius holding structure was a ticking time bomb under the new GAAR regime. Sami's team conducted a ruthless vulnerability audit, tore down the exposed entities, and rebuilt a clean, highly defensible architecture that still preserved exceptional tax efficiency."
— General Counsel, UK Industrial Group
Clarity on Impermissible Avoidance Arrangements, Grandfathering, and the hierarchy of Tax Law.
An arrangement is an IAA if its main purpose is obtaining a tax benefit AND it satisfies at least one of four tainted tests:
Safe Harbor: GAAR does not apply if the tax benefit from the arrangement to all parties combined is ₹3 Crores or less in a financial year.
Investments made prior to April 1, 2017, are generally protected from GAAR re-characterization.
The Caveat:
While the 'income from transfer' (capital gains) of these pre-2017 investments is grandfathered, dividend income or interest flowing from these same grandfathered assets post-2017 CAN still be scrutinized under GAAR if the overarching structure is deemed an avoidance arrangement.
Yes. SAAR and GAAR are not mutually exclusive in India.
Even if your intercompany transactions satisfy Transfer Pricing (SAAR) regulations, the Revenue Department can invoke GAAR if the underlying entity or arrangement itself lacks commercial substance and was created primarily to secure a tax advantage (e.g., routing the TP-compliant transaction through a tax haven shell).
Sami Tax structures must pass both levels: numerical arm's length (SAAR) and structural commercial purpose (GAAR).
The Revenue Department no longer needs to prove fraud to dismantle your tax structure; they only need to prove a lack of commercial substance. Test your exposure today.