India grandfathered gains from investments made before April 2017
Change
India's Central Board of Direct Taxes (CBDT) amended Rule 128 of the Income-tax Rules, 2026 to exclude gains on transfers of investments acquired before April 1, 2017 from the General Anti-Avoidance Rules (GAAR) and to confine GAAR to arrangements that yield tax benefits on or after that date.
Why it matters
Retrospective GAAR challenges against sales of legacy holdings are now blocked, removing a legal route to reopen past exits. Arrangements that produce tax benefits on or after April 1, 2017 remain liable to GAAR review, increasing compliance obligations for future transactions.
Implications
- • Private equity fund portfolio managers must re-run exit and valuation calculations for holdings acquired before April 1, 2017 excluding GAAR-adjusted tax charges to avoid overstating liabilities.
- • Tax compliance teams at foreign asset managers must update tax provisioning and disclosure policies to remove GAAR contingencies for pre‑April 1, 2017 acquisitions or face continued overstated provisions.
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Topics
Policy & Regulation Regulatory Actions Compliance Financial Services