Global investors challenge use of JAAR on grandfathered shares

The Economic Times reports that international investors have raised concerns about Indian income-tax authorities invoking the judicial anti-avoidance rule, known as JAAR, to deny tax benefits on sales of grandfathered shares. The rule was used to reject benefits claimed by at least three Mauritius investors, the outlet says. The shares involved had been acquired before April 1, 2017. The investors’ concerns center on the relationship between JAAR and an earlier restriction concerning the separate general anti-avoidance rule, or GAAR. One person quoted by The Economic Times said the issue should be taken to the government for a legal amendment. Another characterized the use of JAAR after the Central Board of Direct Taxes prohibited GAAR for grandfathered shares as a “retrograde step.”

The outlet also describes a legal complication arising from the Supreme Court’s January 2026 decision in a case involving the American investment firm Tiger Global. According to The Economic Times, the court held that tax authorities may invoke GAAR and JAAR either together or separately. That ruling forms the backdrop to the investors’ concern about applying JAAR to shares acquired before the 2017 cutoff. A senior tax professional told the outlet that foreign investors had been advised an executive decision extending protection on grandfathered shares to JAAR could be construed as contrary to the Supreme Court ruling. The account therefore presents a legal amendment and an executive measure as distinct routes being discussed: one person called for legislation, while the tax professional described a potential legal problem with extending the protection by executive decision. The Economic Times distinguishes the two anti-avoidance rules by their legal basis. GAAR is codified in law and applies when tax benefits exceed ₹3 crore, while JAAR comes from case law. The dispute described by the outlet concerns JAAR’s use against the investors’ claims, alongside the existing restriction on GAAR for grandfathered shares. The investors’ challenge, as reported, concerns the tax treatment of the older shares and how the rules apply after the Supreme Court decision. The account identifies at least three Mauritius investors whose claims were rejected; it does not report a final government decision on the requested legal change or an executive extension of protection.