Taxsurta Conclave 2018 witnessed the best brains in the industry deciphering some burning tax issues. Transaction Square Founding Partners, Girish Vanvari and Amol Khanna, dwelled upon the future of M&A and restructuring in GAAR regime. Highlighting the paramount importance of ‘substance’ in all reorganisations, the team deliberated on various scenarios which could be looked at from GAAR lens and thus drawing home the conclusion that should drive restructurings including NCLT driven Schemes of Arrangements that would have commercial substance. Having said this, drawing a line and defining boundaries in the form of clear scenarios/ examples is also an important consideration since multiple checks and balances like provisions under section 56, section 50CA, section 50C, section 94B, LoB clause in tax treaties, do exist already and if an overarching GAAR is applied to all reorganizations, it may lead to unwarranted litigations thus impacting the business environment as a whole.

As closing remark, the team emphasized that time is ripe for the regulators to amend laws for providing exemptions for genuine cases like internal reorganizations, to ensure that GAAR should not be envoked on such transactions.