New Delhi, Aug. 10 -- The 'substance over form' principle in tax law means that what really happens in a transaction matters more than how it looks on paper. It empowers tax authorities to look past legal documents to understand the true purpose and effect of a deal.

Tax authorities often invoke this doctrine when it helps them deny benefits, disregard sham transactions or expose tax avoidance. However, when it comes to the taxpayer-who may miss a form, a checkbox, or falter on minor procedural compliance-the same tax authorities often rigidly insist on 'form over substance'.

This inequity is starkly evident in several recent compliance frameworks. Consider Form 10-IEA, which taxpayers engaged in a business or profession are required to...