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CS Professional · Goods and Services Tax (GST) and Corporate Tax Planning · Tax Planning and Nature of Business

Which of the following is NOT among the consequences that Section 181 of the Income-tax Act, 2025 says may follow when an arrangement is declared an impermissible avoidance arrangement?

Section 181 permits recharacterising equity as debt, capital as revenue, and looking through corporate structures. It says nothing about cancelling the PAN of the parties, so that is the option that is not a stated consequence of an impermissible avoidance arrangement.

  1. ATreating any equity as debt or vice versa
  2. BTreating a capital receipt as revenue or vice versa
  3. CLooking through the arrangement by disregarding any corporate structure
  4. DRetrospectively cancelling the Permanent Account Number of every partyCorrect

Explanation

Section 181 permits recharacterising equity and debt, capital and revenue items, and looking through corporate structures. Cancelling the PAN of every party is not mentioned anywhere in the section. Hence that option alone is not a stated consequence.

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