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FAQs on Authority for Advance Ruling

Q. Are the Advance ruling, binding on taxpayers or tax authorities?

A. An advance ruling pronounced by the Authority is binding on the follows: –

  • The Applicant.
  • The Commissioner.
  • Commissioner of Income-tax (Appeals).
  • Income-tax authorities who are subordinate to Commissioner
  • In respect of a transaction for which ruling had been sought​

Q. Can I withdraw the Application for Advance Ruling, once I have filed it?

A. ​Yes, you may withdraw the application within 30 days from the date of such application. If you with drawl after such period, you can withdraw it only with the permission of the Authority.​

Q. Can I pay the application fees in cash?

A. No, the application fees payable should be in the form of a demand draft in favor of Authority for Advance Ruling. ​

Q. What fee is to be paid along with the application for the advance ruling?

A. ​The fees to be paid along with the application shall be as follows ​

Category of case Fee
The amount of transaction(s) does not exceed Rs. 100 crores. Rs. 2 Lacs
The amount of transaction(s) exceeds Rs. 100 crores but does not exceed Rs.300 crore. Rs. 5 Lacs
The amount of transaction(s) exceeds Rs. 300 crores. Rs. 10 Lacs
Other Cases Rs. 10,000

Q. What are the requirements of an application for Advance Ruling?

A. An applicant desirous of obtaining an advance ruling may make an application in such form and in such manner as may be prescribed: –

  • Stating the question on which the advance ruling is sought.
  • The application should be in quadruplicate (4 Copy).
  • With prescribed fee.
Also read : FAQs on Direct Tax Vivad Se Vishwas Bill, 2020

Q.What is the meaning of advance ruling?

A. The advance ruling means the determination of a question of law or fact specified in the application in relation to the tax liability of an applicant arising out of transactions which have been undertaken or proposed to be undertaken

Q. When can a resident apply for an advance ruling?

A. ​​A resident can apply to AAR for advance ruling in relation to his tax liability only if the transaction(s) undertaken or proposed to be undertaken is equal to 100 crores or more​

Q. Who can apply for an advance ruling?

A. “​​Applicant” can be any person who is:-

  • A non-resident is desirous of setting up a joint venture in India in collaboration with a non-resident or a resident; or.
  • A resident desirous of  setting up a joint venture in India in collaboration with a non-resident; or
  • A resident;
  • Public Sector Company. (PSU)
Also read : Computation of Income Tax – FAQs & Examples

Q. What is the purpose of Advance rulings?

A. ​The purpose of Advance rulings is to provide clarity on important issues to taxpayers so that they have a clear-cut idea of their tax liability in advance for a given set of transactions.​​

Q. ​What does AAR stand for and what are its functions?

A. ​​​​​​​​​AAR means Authority for Advance Rulings set-up by the Central Government for pronouncing advance rulings in respect applications filed before them.​

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TaxClue Team
Taxclue is an online news portal for reporting all news, articles, judgments, Circulars, orders, and notifications relating to various corporate and tax laws in India. We use the tagline ‘Simplifying Laws’. Our mission is to Simplify the Laws and make people aware of their rights and duties in relation to tax matters in order to equip them to participate in nation-building.

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