Impermissible Avoidance Arrangement

This one is not written up yet

The definition above is the short version. A full explanation — how it works, a worked example and the exam traps — is still being written. In the meantime the chapter below covers it in context.

Written up from the same chapter

• Determinate trustA trust whose beneficiaries and their beneficial interests are ascertainable from the trust deed throughout its life — the structure that lets a Category III AIF avoid MMR on non-business income.
• Dividend Distribution TaxThe tax a mutual fund scheme itself deducted before paying a dividend, abolished from April 2020 — since when the payout has instead been taxed in the investor's own hands at their slab rate.
• General Anti-Avoidance RulesChapter X-A provisions of the Income-tax Act, applying to income arising on or after 1 April 2017, letting the tax authorities deny the benefit of an arrangement that lacks commercial substance and exists mainly for tax.
• IFSCAThe unified regulator of India's International Financial Services Centre, established in April 2020, holding inside the IFSC the powers that RBI, SEBI, IRDAI and PFRDAI hold outside it.
• Maximum Marginal RateThe highest slab rate of income tax, applied to a Category III AIF's business income at fund level because the fund gets no pass-through — 30% before surcharge and cess.
• Minimum Alternate TaxA floor tax on a company's book profits under Section 115JB, payable when it exceeds tax computed the normal way — which catches corporate investors receiving Category III AIF distributions.