Dissecting India's Anti-Avoidance Regime: GAAR, Poem And The Treaty Benefit Eligibility Of Offshore SPVS

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 Nithya Harish, School of Law, CHRIST (Deemed to be University)

ABSTRACT

This paper investigates how the laws and regulations pertaining to the use of offshore Special Purpose Vehicles for investments headed to India are changing, especially when it comes to claiming treaty benefits under Double Taxation Avoidance Agreements. The researcher examines whether India's tax treaties have historically been permissive, examines the growth of treaty shopping and regulatory arbitrage through SPVs, and closely examines the recent treaty amendments, the General Anti-Avoidance Rule, and the Place of Effective Management that have brought about a legal recalibration. It also emphasises the importance of these reforms as fiscal interventions as well as a more general move towards a tax policy that prioritises substance over form and is consistent with India's resolve to protect fiscal sovereignty and prevent the erosion of the tax base. The most significant objections to these reforms can be procedural overlap and ambiguity that result from applying GAAR, POEM and treaty-level anti-abuse provisions all at once. The researcher examines this interaction to determine whether it leads to interpretive ambiguity in real-world applications. In the process, the researcher evaluates how investment structuring strategies have changed in response to these reforms and how international best practices that prioritise economic substance and governance transparency have emerged. The researcher's methodology is centred on doctrinal analysis of international tax instruments, judicial precedents, and statutory provisions that apply to SPV structures. This paper concludes with a call to action and recommendations for lawmakers, investors, and tax authorities. It emphasises how crucial it is to preserve consistency, clarity, and a balance between the enforcement of anti-abuse laws and India's allure as a location for foreign investment.

Keywords: Special Purpose Vehicles, GAAR, POEM, Double Taxation Avoidance Agreements, anti-avoidance.

DISSECTING INDIA'S ANTI-AVOIDANCE REGIME- GAAR, POEM AND THE TREATY BENEFIT ELIGIBILITY OF.

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