GST Advance Ruling (AAR) — How to Apply, Binding Effect & Appeals

Updated: 3 June 2026 | CGST Act Sections 95–106 | State GST Acts (mirror provisions)

A GST Advance Ruling (AAR) is a pre-filing determination by the tax authority on specific GST questions relating to a taxpayer's transactions — such as rate of tax, classification, ITC eligibility, or place of supply. It is binding on the applicant and the GST department for the same set of facts, and must be issued within 90 days of application. It cannot be cited as precedent by other taxpayers.

90 Days

Maximum time for AAR to pronounce a ruling after application
Governed by Section 98(6) of the CGST Act | Fee: ₹10,000 total (₹5,000 CGST + ₹5,000 SGST)

Who Can Apply for a GST Advance Ruling?

Under Section 95(c) of the CGST Act, an Advance Ruling can be sought by an "applicant" — defined as:

Applicant Type	Eligibility	Notes
Registered taxpayer	Any person currently registered under GST	Can ask about existing or future transactions
Person seeking registration	Any person intending to register who is not yet registered	Useful for new businesses to determine liability before commencing

Importantly, a foreign company supplying services to India cannot directly approach the Indian AAR unless it has a business establishment in India.

What Questions Can Be Raised Before the AAR?

Section 97(2) of the CGST Act lists the admissible questions. The AAR can rule on:

CLASSIFICATION

Classification of Goods or Services

Whether a product or service falls under a particular HSN code or SAC — directly impacting the applicable GST rate. Classification disputes are the most common reason for AAR applications.

TAX RATE

Applicable Rate of Tax

The specific GST rate — 0%, 5%, 12%, 18%, or 28% — applicable to the applicant's supply. Includes whether a Nil rate, exemption, or concessional rate applies.

ITC

Input Tax Credit Eligibility

Whether ITC on specific inward supplies is admissible, blocked under Section 17(5), or subject to apportionment under Section 17(1)/(2).

TIME OF SUPPLY

Time of Supply

When a tax liability arises — particularly relevant for continuous supply of services, subscription models, works contracts, and transactions involving advances.

PLACE OF SUPPLY

Place of Supply

Whether CGST+SGST or IGST applies to a specific transaction — a common question for cross-state service providers, digital businesses, and import/export scenarios.

VALUATION

Valuation of Supply

The taxable value where transactions are between related parties, involve free supplies, or complex consideration structures (barter, subsidies, reverse charge scenarios).

AAR Application Process — Step by Step

Step	Action	Timeline
1	File application in Form GST ARA-01 on the GST portal; pay ₹5,000 CGST + ₹5,000 SGST	Day 0
2	AAR checks if question is admissible and not already decided; issues notice to applicant if clarification needed	Within 5–10 days
3	AAR hears the applicant (personal hearing or written submissions)	Scheduled within 30–45 days
4	AAR pronounces ruling in Form GST ARA-02	Within 90 days of application (Section 98(6))
5	If ruling is unfavourable, appeal to AAAR in Form GST ARA-03	Within 30 days of AAR ruling
6	AAAR pronounces order	Within 90 days of AAAR application

AAR vs AAAR vs High Court — Comparison

Forum	Who Presides	Jurisdiction	Binding On	Time Limit	Appeal To
AAR (Authority for Advance Ruling)	Two officers: one each from CGST and SGST, at Joint Commissioner level	State-specific; each state has its own AAR	Applicant and the jurisdictional officer for same facts	90 days	AAAR
AAAR (Appellate Authority for Advance Ruling)	Chief Commissioner / Commissioner level; state-specific	State-specific; hears appeals from AAR in same state	Applicant and the jurisdictional officer for same facts	90 days	High Court
High Court	Division Bench (2 judges minimum for GST matters)	Constitutional writ jurisdiction; question of law	All persons within state jurisdiction; precedent within state	No statutory limit	Supreme Court

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AAR rulings are not precedent. A favourable AAR ruling in Karnataka cannot be cited by a company in Maharashtra facing the same issue. Each state's AAR is independent. To get nationwide clarity, a High Court or Supreme Court decision is required.

Frequently Asked Questions

Can a new business or a person not yet registered under GST apply for an Advance Ruling?

Yes. Under Section 95 of the CGST Act, an Advance Ruling can be sought by any person who is either a registered taxpayer or a person desirous of obtaining registration under GST. This means a new business that has not yet registered but intends to, and wants clarity on GST classification before starting operations, can apply to the AAR in the relevant state. The ruling will be binding once the person registers.

Two state AARs have given conflicting rulings on the same issue — which one applies?

State AARs are independent bodies and their rulings are not binding on AARs in other states. If the Uttar Pradesh AAR and the Maharashtra AAR give contradictory rulings on the same question, each ruling is only binding on the applicant before that respective AAR. The conflict cannot be directly challenged on grounds of contradiction alone. Resolution of such conflicts is expected to happen through the GSTAT (GST Appellate Tribunal) once it is fully operational, or through the High Court/Supreme Court. Businesses operating across states must apply to the AAR in each relevant state separately.

Can a GST Advance Ruling application be withdrawn after filing?

Yes, an applicant can withdraw a pending AAR application before the Authority pronounces its ruling. The application must be submitted in writing. There is no specific time limit prescribed for withdrawal, but it must be done before the ruling is issued. Once the ruling is pronounced, it cannot be withdrawn — the applicant can only appeal to the AAAR within 30 days of the ruling if dissatisfied. There is no refund of the AAR fee if the application is withdrawn.

What is the fee for filing a GST Advance Ruling application?

The application fee for an Advance Ruling under CGST is ₹5,000 (paid as CGST). An equal amount of ₹5,000 is paid under the respective SGST Act, making the total fee ₹10,000 per application. The fee is paid via challan on the GST portal. It is non-refundable regardless of the outcome of the ruling or withdrawal of the application.

For how long is a GST Advance Ruling valid, and can it be revoked?

A GST Advance Ruling remains binding as long as the facts of the applicant's transaction remain the same and the law has not changed. There is no fixed expiry date. However, the ruling becomes void if: (1) the law itself is amended in a manner that makes the ruling inconsistent; (2) a court or tribunal overrules the legal interpretation relied upon in the ruling; (3) the AAR or AAAR finds that the ruling was obtained by fraud, suppression of material facts, or misrepresentation. In such cases, the ruling can be declared void ab initio — as if it was never issued.

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