Advance Ruling

In order to provide the facility of ascertaining the Income-tax liability of a non-resident, to plan
their Income-tax affairs well in advance for a transaction which he is going to undertake and to
avoid long drawn and expensive litigation relating to it, Advance Rulings has been introduced
under the Income-tax Act, 1961. Advance ruling can be obtained by a non-resident, a resident
who wants to undertake a transaction with a non-resident, a notified public sector company & any
person can obtain an advance ruling for arrangement proposed is subjected to General Anti
Avoidance Rules or not. Advance ruling pronounced is binding both on the Income-tax
Department and the applicant.

Application for Advance ruling is to be made in quadruplicate in Form Nos.: 34C, 34D, 34E and
34EA as applicable with an account-payee demand draft for 10,000 INR. The application may be
withdrawn within 30 days from the date of the application. The Authority shall pronounce it
advance ruling within 6 months of receipt of the application. An Applicant can ask one or more
question which may be on points of law as well as on fact. Questions can also be asked relating
to allied laws that may have a bearing on tax liability such as the law of contracts, the law of
trusts, etc. The questions that cannot be asked are determination of fair market value of any
property or implications of transaction which are designed prima facie for the avoidance of
income-tax.