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Advance Ruling

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An Advance Ruling is a written opinion or decision by the designated ‘Board for Advance Rulings’ on the tax consequences of a transaction (either undertaken or proposed to be undertaken). The objective is to provide taxpayers, particularly non-residents, with clarity on tax implications before entering into a transaction. The Board for Advance Rulings shall consist of two members, each being an officer not below the rank of Chief Commissioner, as may be nominated by the Board.

  1. Non-residents
  2. Residents proposing to enter into a transaction with a non-resident, in respect of tax liability of the non-resident.
  3. Residents undertaking or proposing transactions exceeding INR 100 crore (notified by the central government)
  4. Notified Public Sector Undertaking
  5. Any person (resident or non-resident) to determine whether a proposed arrangement is an impermissible avoidance arrangement under GAAR
Feature Details
a) Transaction-Based Application
  • Ruling must relate to a transaction entered into or proposed to be transacted by the applicant.
  • Questions must arise from the facts and circumstances of that transaction.
    		•
    b) Scope of Questions
  • Multiple questions can be raised in a single application.
  • Questions may involve issues of fact, law, or mixed questions.
  • They must relate directly to tax liability under the Act, including international tax and treaty-related matters.
  • Questions involving related legal frameworks (e.g., contracts, trusts) are permissible if they affect tax liability.

    • Note: Hypothetical questions or those not specified in the application will not be admitted. Amendments to questions are allowed only in exceptional cases.
    c) GAAR Applicability
  • Applicants can seek rulings on whether a proposed arrangement falls under impermissible avoidance arrangement under Chapter X-A (GAAR provisions).
    • d) Time Limit
  • The Board must pronounce the advance ruling within 6 months from the receipt of the application.
    • e) Binding Nature
  • The ruling is binding only on:
  • It does not have general applicability.
    • f) Void in some cases
  • If the BAR finds that an advance ruling was obtained by fraud or misrepresentation of facts, it can declare the ruling void ab initio (i.e., as if it never existed).
  • Once declared void, all provisions of the Act will apply to the applicant as if the advance ruling had never been made.
  • The period between the date of the advance ruling and the date of the void order is excluded for the purpose of applying the Act.

    • The applicant must submit the application in the prescribed form (in quadruplicate) as per the nature of the applicant. The application should be accompanied by a fee of INR 10,000 or such fee as may be prescribed, whichever is higher. The applicable fee structure is as follows:

    Category of Applicant Value of Transaction Fee (INR)
    Non-resident / Resident applicants/
    Residents undertaking or proposing
    transactions exceeding INR 100 crore    		 ≤ INR 100 crore 2,00,000
    > INR 100 crore but ≤ INR 300 crore 5,00,000
    > INR 300 crore 10,00,000
    Any other applicant In all cases 10,000

    An application can be withdrawn within 30 days from the date of the application.