Advance Ruling Services

Advance Ruling under Income Tax Act in India

The scheme of advance rulings was introduced by the Finance Act, 1993, Chapter XIX-B of the Income-tax Act, which deals with advance rulings, came into force with effect from 1-6-1993. Under the scheme, the power of giving advance rulings has been entrusted to an independent adjudicatory body. Accordingly, a high level body headed by a retired judge of the Supreme Court has been set up. This is empowered to issue rulings, which are binding both on the Income-tax Department and the applicant. The procedure prescribed is simple, inexpensive, expeditious and authoritative Advance Ruling, means 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. It has been defined in section 245N (a) of the Income-tax Act, 1961 as amended from time to time. Under section 245N, a ruling can be obtained by an applicant (who may be either a non-resident or a resident having a transaction with a non-resident) in respect of any question of law or fact in relation to the tax liability of the non-resident arising out of a transaction undertaken or proposed to be undertaken.

Advance Ruling under Central Excise, Customs & Service Tax in India

The scheme of Advance Rulings allows the following categories of applicants to seek an advance ruling:

• Any person who is a non-resident setting up a joint venture in India in collaboration with a non-resident or a resident;
• Any person who is a resident setting up a joint venture in India in collaboration with a non-resident;
• A wholly owned subsidiary Indian company of which the holding company is a foreign company;
• A joint venture in India;

"joint venture in India" means a contractual arrangement whereby two or more persons undertake an economic activity which is subject to joint control and one or more of the participants or partners or equity holders is a non-resident having substantial interest in such arrangement;'.

A resident falling within any such class or category of persons as the Central Government may, by notification in the official gazette specify in this behalf – [The Central Government has vide Notification No.69/2005 dated 29.07.2005 specified a resident as an applicant who proposes to import any goods from the Republic of Singapore under Comprehensive Economic Co-operation Agreement (CECA)]

[“Non-resident”, “Indian company” and “Foreign company” have the meanings respectively assigned to them in clauses (30), (26) and (23A) of section 2 of the Income Tax Act, 1961