Chapter XI of the Income-tax Act, 2025 — General Anti-Avoidance Rule

What this chapter does

Sections 178 to 184 set out when GAAR applies, what makes an arrangement an impermissible avoidance arrangement, when an arrangement is treated as lacking commercial substance, and what consequences follow. Sections 182 and 183 deal with connected persons, accommodating parties and the application of the chapter. GAAR is drafted to sit on top of everything else, so a transaction can satisfy every specific provision in the Act and still fail here.

What to watch

• Commercial substance under section 180 is the battleground; the tax benefit alone is not the test.
• A treaty does not switch GAAR off — several treaties now carry a principal purpose test of their own as well.

The sections in this chapter

• Section 178 — Applicability of General Anti-Avoidance Rule
• Section 179 — Impermissible avoidance arrangement
• Section 180 — Arrangement to lack commercial substance
• Section 181 — Consequences of impermissible avoidance arrangement
• Section 182 — Treatment of connected person and accommodating party
• Section 183 — Application of this Chapter
• Section 184 — Interpretation