India's CBDT grandfathered gains from investments made before April 2017
Change
India's CBDT amended Rule 128 of the Income-tax Rules, 2026 to exclude gains on transfers of investments acquired before April 1, 2017 from the application of the general anti-avoidance rules (GAAR).
Why it matters
The amendment narrows the reach of GAAR enforcement by removing retrospective exposure for transfers tied to legacy acquisitions, limiting anti-avoidance reviews to arrangements that generate tax benefits on or after April 1, 2017. That reduces litigation and compliance uncertainty for holders of pre-2017 assets and clarifies tax treatment for cross-border exits.
Implications
- • Private equity fund managers should reassess exit and sale timetables for portfolio holdings acquired before April 1, 2017 and can consider foregoing GAAR-driven restructurings for those disposals.
- • In-house tax teams at foreign investment firms should update tax opinions and exit documentation to reflect the Rule 128 amendment before completing disposals of legacy assets.
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