Chapter XI relating to General Anti Avoidance Rule not to apply in certain cases

Chapter XI does not apply to (sub-rule 1).

• (a) an arrangement where the aggregate tax benefit in the relevant tax year to all parties does not exceed three crore rupees;
• (b) a Foreign Institutional Investor who is an assessee under the Act, has not taken the benefit of an agreement under section 159, and has invested in listed or unlisted securities with the prior permission of the competent authority, in accordance with the SEBI (Foreign Institutional Investors) Regulations, 1995;
• (c) a non-resident, in relation to investment made by way of offshore derivative instruments or otherwise, directly or indirectly, in such a Foreign Institutional Investor; and
• (d) any income accruing, arising or received by any person from transfer of investments made before 1 April 2017 by that person.

Amendment of clause (d) and sub-rule (2). The text of clause (d) and sub-rule (2) as printed in the Rules carries the note that they were substituted by the IT (Amdt.) Rules, 2026 w.e.f. 1-4-2026, with the earlier wording shown in footnotes. Chapter XI applies to any arrangement, irrespective of when it was entered into, for tax benefit obtained on or after 1 April 2017, except for income from transfer of investments made before 1 April 2017 (sub-rule 2).

Definitions (sub-rule 3). "Foreign Institutional Investor" is as in section 210(6)(a); "offshore derivative instrument" is as in the SEBI (Foreign Institutional Investors) Regulations, 1995; "tax benefit" is as in section 184(11), computed under Chapter XI — for section 184(11)(a) to (e) the amount of tax, and for section 184(11)(f) the tax that would have been chargeable had the increase in loss been total income.