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Advance Ruling

Providing certainty in tax planning by aiding in informed decision making.

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.

A. Who Can Apply for an Advance Ruling?
  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
FeatureDetails
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 ApplicantValue of TransactionFee (INR)
Non-resident / Resident applicants/
Residents undertaking or proposing
transactions exceeding INR 100 crore		≤ INR 100 crore2,00,000
> INR 100 crore but ≤ INR 300 crore5,00,000
> INR 300 crore10,00,000
Any other applicantIn all cases10,000

An application can be withdrawn within 30 days from the date of the application.

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