GAAR, is a tax provision that enables tax foreign investments.

Chidambaram said that the government has accepted major recommendations of the Shome Committee on GAAR and went on to clarify that a show-cause notice would follow the invocation of GAAR.

It may be recalled that GAAR was proposed by the then Finance Minister Pranab Mukherjee in the 2012-13 budget with a view to preventing tax evasion through foreign investments. This worried foreign funds, particularly those investing through P-Notes in India.

The government later appointed a committee headed by tax expert Parthasarthi Shome to look into their concerns.

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