Does GAAR affect a straightforward holding structure for India investment?

India's General Anti-Avoidance Rules let tax authorities disregard an arrangement's tax benefit if its main purpose was avoidance rather than genuine business activity. This is assessed alongside the treaty's Principal Purpose Test, which asks whether obtaining the treaty benefit was one of the principal purposes of the structure.

A holding company with a real local office, staff, board meetings actually held in that jurisdiction, and decisions genuinely made there is materially harder to challenge than a paper entity with a registered address and nothing else. GAAR risk isn't really about which jurisdiction you pick — it's about whether the entity in that jurisdiction does anything beyond holding shares.