Consider the following statements:

1. In order to contain the problem of tax evasion, the Government of India had decided to introduce GAAR or General Anti Avoidance Rules.
2. GAAR empowers the Revenue Authorities to deny tax benefits of transactions or arrangements, which do not have any commercial substance or consideration other than achieving the tax benefit.

Which of the statements given above is/are true?

Statement 1 is wrong. GAAR is a step to contain the problem of tax avoidance, not to contain tax evasion. Tax avoidance is generally the legal exploitation of the tax regime to one's own advantage, to attempt to reduce the amount of tax that is payable by means that are within the law whilst making a full disclosure of the material information to the tax authorities. Statement 2 is perfectly correct: GAAR is a concept which generally empowers the Revenue Authorities in a country to deny the tax benefits of transactions or arrangements which do not have any commercial substance or consideration other than achieving the tax benefit.