The Central Board of Direct Taxes (CBDT) has amended income tax rules to provide clarity on the applicability of General Anti-Avoidance Rules (GAAR), in a move aimed at reducing ambiguity around tax avoidance provisions. 

In its notification, the CBDT said that GAAR will not apply to income arising from the transfer of investments made before April 1, 2017. The amendment will come into effect from April 1, 2026.

The clarification is expected to provide certainty to investors, particularly in relation to legacy investments, by clearly defining the scope of GAAR provisions.

The development follows a recent ruling by the Supreme Court against Mauritius-based Tiger Global International, where the apex court upheld the Income Tax Department’s right to tax the private equity major on gains from its exit from Flipkart in 2018.

The amendment is seen as part of the government’s broader effort to balance anti-avoidance measures with the need for a stable and predictable tax regime.

Apart from this, the new income tax law has come into effect from the new fiscal, replacing the six-decade-old 1961 legislation and introducing changes in compliance, terminology and taxation.

A key reform under the new framework is the replacement of the ‘Financial Year’ (FY) and ‘Assessment Year’ (AY) with a single ‘tax year’, which is expected to simplify the filing process and improve clarity for taxpayers.

In addition, timelines for filing income tax returns have been revised. While the July 31 deadline remains unchanged for salaried individuals, non-audit cases such as self-employed taxpayers and professionals will now have time until August 31 to file their returns.

Meanwhile, charges on trading in futures and options have increased, as the Securities Transaction Tax (STT) was raised in the Union Budget by Finance Minister Nirmala Sitharaman.

In a major shift, stock buybacks will now be taxed as capital gains instead of deemed dividends, impacting both promoters and retail investors.