Last updated on June 17th, 2022 at 06:41 pm
Advance Ruling under Income Tax
Advance Ruling can be sought by a resident taxpayer in order to get clarification on taxation issues in respect of the transaction undertaken or proposed to be undertaken with a non-resident. Similarly, it can be sought by a non-resident in order to get clarification on taxation issues in respect of the transaction undertaken or proposed to be undertaken in India.
Define Advance Ruling
As per section 245N(a) of the Income Tax Act 1961, Advance Ruling is a written opinion or authoritative decision by an Authority empowered to render it with regard to the tax consequences of a transaction or proposed transaction or an assessment in regard thereto. Provisions of the advance ruling are covered 245N to 245V.
Which Form is applicable for an advance ruling? | Who is the applicant for an advance ruling?| What can be a subject matter for an advance ruling?
Forms for obtaining an advance ruling u/s 245Q (1) of the Income-Tax Act,1961
CBDT amends Rule 44E of Income Tax Rules,1962 to notify the new forms for filing the application of the advance ruling vide a CBDT Notification 49/2022 dated 6th May 2022
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| Form | Applicant | Subject Matter for Advance Ruling |
| Form No. 34C | Non-resident applicant u/s 245N(a)(i) | Determination of transaction undertaken or proposed to be undertaken by a non-resident applicant. |
| Form No. 34D | Resident applicant u/s 245N(a)(ii) | Determination of the tax liability of a non-resident for a transaction undertaken or proposed to be undertaken by a resident applicant with a non-resident applicant. |
| Form No. 34DA | Resident applicant u/s 245N(a)(iia) | Determination of the tax liability of a resident & determination of any question of law or of fact for a transaction undertaken or proposed to be undertaken by a resident applicant with a non-resident applicant. |
| Form No. 34E | Resident applicant falling within class or category of person as notified by the CG u/s 245N(b)(a)(IV) | Computation of total income & decision of any question of law or of fact which is pending before any Income Tax Authority or the Appellate Tribunal. |
| Form No. 34EA | Resident or Non-resident Applicant u/s 245N(a)(iv) | Determination of whether the proposed arrangement is an impermissible avoidance arrangement as referred to in Chapter X-A or not. |
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When an application for advance ruling cannot be allowed?
When an advance ruling is sought for a matter
⇒ Which is already pending before any Income-Tax Authority or Appellate Tribunal or any Court.
⇒ Which involves the determination of the fair market value of any property.
⇒ Where the transaction is designed prima facie for the avoidance of income tax.
Note: Advance Ruling will be allowed where an application is made in Form 34E or 34EA.
What is the fee for filing an application for an advance ruling?
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|
Category of Applicant |
Amount of one or more transactions undertaken or proposed to be undertaken | ||
| Transaction Value less than Rs 100 Crores | Transaction Value in between Rs 100 crores to 300 crores |
Transaction Value more than Rs 300 Crores |
|
|
Non-resident applicant |
Rs 2 lakhs | Rs 5 lakhs | Rs 10 lakhs |
| A resident applicant for determination of tax liability of a non-resident |
Rs 2 lakhs |
Rs 5 lakhs |
Rs 10 lakhs |
|
A resident applicant for determination of tax liability of resident (own liability) |
Rs.10 thousand | Rs 5 lakhs | Rs 10 lakhs |
| Any other applicant | Rs.10 thousand | Rs.10 thousand |
Rs.10 thousand |
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