General Anti Avoidance Rules (GAAR) is a set of general rules enacted so as to check tax avoidance. Many methods are adopted by taxpayers to reduce their tax liability such as - "Tax Evasion"; "Tax Avoidance", "Tax Mitigation" and "Tax Planning". If the method is illegal as is in the case of Tax Evasion, the taxpayer may be penalized, however in most cases the methods adopted to reduce tax liability are legal as in Tax Avoidance, and per se the tax authorities are helpless. Tax avoidance, is by and large not defined in taxing statutes. Tax avoidance is, nevertheless, the outcome of actions taken by the assessee, none of which or no combination of which is illegal or forbidden by the law as such. It is an attempt to reduce tax liability through regulating the affairs in such a way that the taxpayer pays the minimum tax imposed by the Act as opposed to the maximum. Tax Avoidance involves the legal exploitation of tax laws to one‘s own advantage and therefore it is an area of concern across the world.