Introduction - Advance Ruling - International Taxation - Income Tax

A non-resident taxpayer may have some taxation issues in respect of transaction which has been undertaken or proposed to be undertaken with a resident. Similarly, a resident may have some taxation issues in respect of transaction which has been undertaken or proposed to be undertaken by him with non-resident in India. In order to get clarification on taxation of those transactions, a scheme of advance ruling was introduced by incorporating Chapter XIX B in the Income Tax Act,1961 by the Finance act 1993. A person (Resident or Non Resident) can make an application to the Authority for Advance Rulings ( AAR‟) on issue which could arise in determining their tax liabilities so that time consuming and expensive appeals can be avoided. And provisions relating to advance ruling are provided in sections 245N to 245V. Under the direct tax laws, the power of giving advance rulings has been entrusted to BAR, and it has been ensured that the procedure is simple, inexpensive, expeditious and technology-driven. The BAR has full power of civil court under the Code of Civil Procedure, 1908 as referred to in section 131 of the Act to give its rulings in respect of specific questions of law and facts.