Chapter XI - General Anti-Avoidance Rule
Section 182
Section 182: treating connected persons and accommodating parties under GAAR
Section 182 gives four ways an arrangement may be examined when determining whether a tax benefit exists under the General Anti-Avoidance Rule chapter. It addresses connected persons, accommodating parties and corporate structure.
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This article is for general information. Refer to the Income-tax Act, 2025 as amended by the Finance Act, 2026 and the Taxation and Other Laws (Amendment) Act, 2026 for the official provisions. If you need professional advice for your situation, contact Bizeneed.
Statutory text
Bare law
In this Chapter, in determining whether a tax benefit exists,—
(a) the parties who are connected persons in relation to each other may be treated as one and the same person;
(b) any accommodating party may be disregarded;
(c) the accommodating party and any other party may be treated as one and the same person;
(d) the arrangement may be considered or looked through by disregarding any corporate structure.
Introduction
Section 182 operates at the tax-benefit inquiry stage of the GAAR chapter. It allows the decision-maker to treat certain connected or accommodating parties as a single person, or disregard a corporate structure, when examining the arrangement.
Each listed treatment is permissive: the Act uses “may”. Its definitions of connected person and accommodating party come from section 184.
Key takeaways
Connected persons
Parties connected to each other may be treated as one person.
Accommodating parties
An accommodating party may be disregarded, or treated as one person with another party.
Structure
The arrangement may be considered by looking through and disregarding a corporate structure.
Permitted treatments
In determining whether a tax benefit exists, the section permits the four treatments in clauses (a)–(d): combining connected persons; disregarding an accommodating party; combining that party with another party; and looking through a corporate structure.
Connected persons can be viewed together
Clause (a) lets the tax-benefit inquiry treat parties connected to each other as one person. The statutory definition of connected person is in section 184 and includes specified family, management and business relationships; mere commercial contact is not, by itself, the definition.
Accommodating party and corporate structure
Clauses (b) and (c) allow an accommodating party to be disregarded or combined with another party. Clause (d) separately permits looking through an arrangement by disregarding a corporate structure. These are alternative analytical treatments when deciding whether a tax benefit exists, not automatic consequences for every transaction involving related parties.
Step-by-step flow for applying Section 182
- 1
Is the question whether a tax benefit exists under Chapter XI?
Section 182 applies when determining whether a tax benefit exists under the GAAR chapter.
- No: Section 182 is not the relevant provision.
- Yes: Go to the next step.
- 2
Are any parties connected persons in relation to each other?
Use the definition of connected person in Section 184.
- Yes: Under clause (a), they may be treated as one and the same person.
- No: Go to the next step.
- 3
Is there an accommodating party?
Use the definition of accommodating party in Section 184.
- Yes: Under clause (b) it may be disregarded, or under clause (c) treated as one with another party.
- No: Go to the next step.
- 4
Does a corporate structure hide the real arrangement?
Under clause (d), the arrangement may be considered or looked through by disregarding any corporate structure. Then check whether a tax benefit still appears once these treatments are applied.
Practical checklist
Do
- Identify which parties meet the section 184 connected-person or accommodating-party definitions.
- Show whether combining or disregarding them changes the claimed tax benefit.
Avoid
- Assume every connected person must be combined; section 182 uses permissive language.
Illustrative example
Worked example: a family arrangement with an intermediary
Hypothetical facts (illustration only, not a real taxpayer): Mr. Iyer sells an asset to a company owned by his relative, which then passes it to Mr. Iyer's own company. A friend is added as a nominal party in between and takes no real role.
Connected persons
If Mr. Iyer, his relative's company and his own company are connected persons under Section 184, clause (a) allows them to be treated as one and the same person.
Accommodating party
If the friend's participation mainly serves to obtain a tax benefit for the assessee, he is an accommodating party and may be disregarded under clause (b).
Look-through
Clause (d) allows the company layer to be disregarded so that the movement of the asset is seen as a whole.
Result of the test
Seen this way, the asset moves from Mr. Iyer to an entity he controls. The tax benefit question is then answered on that combined view.
Outcome
- Each treatment is permissive ("may"), so it is applied only where it fits the facts.
- Section 182 helps decide whether a tax benefit exists; the consequences of an impermissible arrangement are a separate step.
Glossary
- Connected person
- A person connected directly or indirectly to another, as defined in Section 184.
- Accommodating party
- A party whose participation mainly serves to obtain a tax benefit for the assessee, as defined in Section 184.
- Looking through
- Considering an arrangement by disregarding any corporate structure, under clause (d).
Frequently asked questions
Must every connected person be treated as one person?
No. Section 182 says connected persons may be so treated when determining whether a tax benefit exists.
Can an accommodating party be disregarded?
Yes. Clause (b) expressly permits that treatment.
Can a corporate structure be ignored under Section 182?
Yes. Clause (d) allows the arrangement to be considered or looked through by disregarding any corporate structure when determining whether a tax benefit exists.
Need help applying this provision to your situation?
Get a GAAR risk review of your arrangementLast updated 9 October 2026