Section 95 → Section 194
Applicability of General Anti-Avoidance Rule (GAAR)
Quick Answer
Section 95 of the Income Tax Act, 1961 (Applicability of General Anti-Avoidance Rule (GAAR)) corresponds to Section 194 of the Direct Tax Code 2025 (Income-tax Act, 2025), effective 1st April 2026. Status: Retained.
Sec 95
Provision Summary
Declares that any arrangement entered into by an assessee may be declared an 'impermissible avoidance arrangement' and the tax consequences determined accordingly.
Sec 194
Provision Summary
Retained as the ultimate anti-abuse weapon of the Income Tax Department. Overrides all other provisions of the Act.
Key Changes & Highlights
- The threshold of Rs. 3 Crore tax benefit for triggering GAAR remains intact.
Related Sections
Frequently Asked Questions
What does Section 95 of the Income Tax Act 1961 deal with?
Section 95 (Applicability of General Anti-Avoidance Rule (GAAR)) Declares that any arrangement entered into by an assessee may be declared an 'impermissible avoidance arrangement' and the tax consequences determined accordingly.
What is the new section number for Section 95 under the Direct Tax Code 2025?
Section 95 of the ITA 1961 maps to Section 194 of the Direct Tax Code 2025 (Income-tax Act, 2025), effective from 1st April 2026.
What is the status of Section 95 under the new tax code?
Section 95 is marked as "Retained" with status "Active". Impact: Critical - Gives sweeping powers to the tax department to pierce corporate veils and ignore complex legal structures.
What are the key changes to Section 95 under DTC 2025?
The threshold of Rs. 3 Crore tax benefit for triggering GAAR remains intact.
Disclaimer: This page is for educational and reference purposes only. Section mappings are based on publicly available drafts and circulars. Always consult a qualified Chartered Accountant before filing or making compliance decisions under the Direct Tax Code 2025.
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