India grandfathered gains from investments made before April 2017

The Central Board of Direct Taxes said income from the transfer of investments made before April 1, 2017 will remain outside the ambit of general anti-avoidance rules (GAAR), providing clarity and relief to investors holding legacy assets.

In a notification issued late Tuesday night, the CBDT amended a Rule 128 of the Income-tax Rules, 2026, grandfathering gains from investments made before April 2017.

The amended rules state that GAAR provisions will apply to any arrangement that yields tax benefits on or after that date, regardless of when the arrangement was originally entered into.


The move is significant as it draws a clearer line between protected investments and arrangements open to tax scrutiny.

The clarification is expected to reassure foreign investors and private equity funds on taxation of exits from legacy holdings, while strengthening the government’s ability to challenge aggressive tax planning.

India introduced GAAR to curb tax avoidance through complex arrangements, but concerns over retrospective application have persisted. The latest amendment seeks to address those concerns while reinforcing enforcement of anti-avoidance provisions.