Sections 380 explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
Sections 380 to 384 of the Income-tax Act, 2025 are the first five sections of the advance-ruling scheme in part D.2 of Chapter XVIII. They define "advance ruling" and "applicant", provide for the Board for Advance Rulings, say how to apply, and set out how the Board handles an application. This article reads them as per the Income-tax Act, 2025 (30 of 2025) as amended by the Finance Act, 2026.
An advance ruling is a determination by the Board for Advance Rulings on a transaction undertaken or proposed, or on an issue of computation of total income pending before an authority, or on whether an arrangement is an impermissible avoidance arrangement. The Board for Advance Rulings has two members, each not below the rank of Chief Commissioner. An applicant applies in the prescribed form with the prescribed fee and may withdraw within thirty days. The Board must reject an application on three grounds (section 384(3)), after a hearing, and must pronounce its ruling within six months of receipt.
Where these sections sit
The five sections open part D.2, "Advance rulings", of Chapter XVIII. Sections 385 to 389 (bar on other proceedings, void rulings, powers, procedure and appeal) are covered in our post on sections 385 to 389. Part D.1, the Dispute Resolution Committee, is covered in the article on section 379. The Chapter is summarised in the Chapter XVIII guide. Later amendments, rules and notifications should be checked.
If you are planning a transaction and want to understand your options before it is undertaken, see our page on legal consultation.
Section 380: interpretation
"Advance ruling" (clause (a))
| Sub-clause | Determination by the Board for Advance Rulings |
|---|---|
| (i) | In relation to a transaction undertaken or proposed by a non-resident applicant |
| (ii) | In relation to the tax liability of a non-resident arising out of a transaction undertaken or proposed by a resident applicant with such non-resident |
| (iii) | In relation to the tax liability of a resident applicant arising out of a transaction undertaken or proposed by the applicant; it includes determination of any question of law or of fact specified in the application |
| (iv) | A determination or decision on an issue relating to computation of total income which is pending before any income-tax authority or the Appellate Tribunal; it includes any question of law or fact relating to that computation specified in the application |
| (v) | A determination or decision whether an arrangement proposed by any person, resident or non-resident, is an impermissible avoidance arrangement as referred to in Chapter XI or not |
For Chapter XI, see our post on section 179 (impermissible arrangements).
"Applicant" (clause (b))
An applicant is a person who makes an application under section 383(1) and:
- (i) is a non-resident referred to in clause (a)(i); or
- (ii) is a resident referred to in clause (a)(ii); or
- (iii) is a resident referred to in clause (a)(iii) falling within a class or category specified by the Central Government by notification; or
- (iv) is a resident falling within a class or category specified by the Central Government by notification in this behalf; or
- (v) is referred to in clause (a)(v).
What has been notified is not in the text consulted; check the notifications.
Other terms (clauses (c) to (e))
"Application" means an application to the Board for Advance Rulings under section 383(1); "Board for Advance Rulings" means the Board constituted under section 381; "Member" means a Member of that Board.
Section 381: the Board for Advance Rulings
- (1) The Central Government shall constitute one or more Boards for Advance Rulings, as necessary, for giving advance rulings under the Chapter on or after such date as the Central Government may, by notification, appoint.
- (2) Each Board consists of two members, each being an officer not below the rank of Chief Commissioner, as nominated by the Board.
The date from which rulings are given is left to a notification, which is not in the text consulted.
Section 382: vacancies do not invalidate
No proceeding before, or pronouncement of an advance ruling by, the Board for Advance Rulings shall be questioned or be invalid merely on the ground of any vacancy or defect in the constitution of the Board for Advance Rulings.
Section 383: application for advance ruling
- An applicant desirous of obtaining an advance ruling may make an application in such form and manner as may be prescribed, stating the question on which the ruling is sought.
- The application is accompanied by a fee, as may be prescribed.
- The applicant may withdraw the application within thirty days from the date of the application.
The form, manner and fee are left to the Income-tax Rules, 2026; see our rule-wise guides. The Act prints no fee here.
Section 384: procedure on receipt of an application
| Sub-section | What it provides |
|---|---|
| (1) | The Board forwards a copy of the application to the Principal Commissioner or Commissioner and calls upon him to furnish the relevant records, which are returned at the earliest opportunity |
| (2) | After examining the application and the records, the Board may allow or reject the application by an order |
| (3) | An application shall be rejected if the question raised is (a) already pending before any income-tax authority, the Appellate Tribunal or any court (except for a resident applicant falling under section 380(b)(iii)); (b) involves determination of fair market value of any property; or (c) relates to a transaction or issue designed prima facie for avoidance of income-tax (except for a resident applicant under section 380(b)(iii), or an applicant under section 380(b)(iv)) |
| (4) | No rejection under sub-section (2) unless the applicant has been given an opportunity of being heard and reasons are given in the order |
| (5) | A copy of every order under sub-section (2) goes to the applicant and the Principal Commissioner or Commissioner |
| (6) | Where allowed, the Board examines further material and pronounces its ruling in writing within six months of receipt of the application |
| (7) | On the applicant's request, the Board gives an opportunity of being heard before pronouncing, in person or through an authorised representative |
| (8) | A copy of the ruling, duly signed by the Members and certified as prescribed, is sent to the applicant and the Principal Commissioner or Commissioner as soon as may be |
| (9) | "Authorised representative" has the meaning in section 515(3)(a), as if the applicant were an assessee |
Section 384(3) is expressed as a duty ("shall be rejected"). The exceptions for resident applicants in clauses (a) and (c) refer back to section 380(b)(iii) and (iv).
Worked example
Delta Bridge Overseas Limited (an invented non-resident company) proposes to enter into a transaction in India and applies to the Board for Advance Rulings under section 383(1) in the prescribed form, stating its question and paying the prescribed fee. It is a non-resident applicant under section 380(b)(i). The Board forwards a copy to the Principal Commissioner and calls for the records (section 384(1)). Suppose the application is received on 3 January; the ruling is due to be pronounced within six months of receipt if the application is allowed (section 384(6)), that is, by 3 July.
If the question raised is already pending before the Appellate Tribunal, section 384(3)(a) requires the application to be rejected, unless the applicant is a resident applicant falling under section 380(b)(iii). Before rejecting, the Board must give the applicant a hearing and state its reasons (section 384(4)). If, on the other hand, the applicant changes its mind, it may withdraw within thirty days from the date of the application (section 383(3)): for an application dated 3 January, the thirty days run to 2 February.
Need help considering an advance ruling?
If you are structuring a transaction and want to know whether an advance ruling is open to you, our team can help you read sections 380 to 384 against your facts. Please contact us through the page for legal consultation.
Key takeaways
- An advance ruling can cover a transaction, a question of computation of total income, or whether an arrangement is an impermissible avoidance arrangement.
- The Board for Advance Rulings has two members, each not below the rank of Chief Commissioner.
- The application is in the prescribed form, with the prescribed fee, and may be withdrawn within thirty days.
- Rejection is mandatory on the grounds in section 384(3), after a hearing and with reasons.
- A ruling must be pronounced within six months of receipt of the application.
Read next
- Sections 385 to 389: bar on other proceedings, void rulings, powers and appeal
- Section 379: Dispute Resolution Committee
- Section 179: impermissible arrangements
- Chapter XVIII guide
Disclaimer: Based on the Income-tax Act, 2025 (30 of 2025) as amended by the Finance Act, 2026, as consulted on 2 October 2026. It explains the words of the Act only; the Income-tax Rules, 2026, notifications, circulars, later amendments and the way the tax authorities and courts apply these provisions should be checked. This article is general information, not legal advice; check the official text before acting.