Introduction: The Ministry of Finance has taken a significant step towards enhancing tax clarity and efficiency with the operationalisation of the Board for Advance Rulings. This move aims to streamline the process of advance rulings while promoting transparency and accountability.
Analysis: The Central Board of Direct Taxes introduced three Boards for Advance Rulings in September 2021. The Scheme of E-advance Ruling, introduced through Notification No. 07 of 2022, aims to simplify the advance rulings process and enhance overall efficiency. The operationalisation of the Boards in Delhi and Mumbai further solidifies this initiative. By utilizing e-mail-based procedures and video conferencing, the Boards are making tax rulings more accessible and convenient.
This development benefits both non-resident investors and resident entities. Non-resident investors can now gain clarity on their income tax liability before making investments in India. On the other hand, resident entities can seek rulings on the taxability of transactions, thus avoiding prolonged litigation. The scheme also extends to resident taxpayers dealing with transactions worth Rs. 100 crore or more. Additionally, Public Sector Undertakings can use this platform to seek advance rulings on legal matters pending before income-tax authorities or Appellate Tribunals.
To facilitate the process of seeking Advance Rulings, the Chairman of the CBDT has released a Handbook for the Board for Advance Rulings. This Handbook serves as a guide for taxpayers, offering assistance and clarity on the procedure. Its release on August 18, 2023, marks a significant milestone in providing taxpayers with the necessary guidance.
Conclusion: The operationalisation of the Boards for Advance Rulings reflects the government’s commitment to reducing disputes and facilitating prompt resolution. This mechanism promises to enhance the investor and taxpayer experience by providing clear, efficient, and transparent tax rulings. The Ministry of Finance’s initiative is a commendable step towards achieving tax certainty and boosting confidence in the tax system.
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Ministry of Finance
Operationalisation of the Board for Advance Rulings
Posted On: 19 AUG 2023
The Central Board of Direct Taxes constituted three Boards for Advance Rulings in September, 2021. Further, by Notification No. 07 of 2022, the Scheme of E-advance Ruling was introduced with an objective to make the entire process of advance rulings with a minimal interface and impart greater efficiency, transparency and accountability.
Subsequently, the Boards for Advance Rulings have been operationalised in Delhi and Mumbai. These Boards started functioning through e-mail-based procedures and conducting hearing through video conferencing.
A non-resident investor can obtain certainty on its liability towards income tax even before undertaking the investment in India. Further, even a resident entity can obtain a Ruling on the taxability of a transaction and avoid long-drawn litigation, as the Scheme is also available to a resident taxpayer seeking an advance ruling concerning its tax liability arising out of one or more transactions, valuing Rs.100 crore or more in total. Public Sector Undertakings can take advantage of getting advance rulings on questions of facts or law pending before any income-tax authority or Appellate Tribunal.
To provide general guidance and assistance to the taxpayers on the procedure to seek Advance Rulings, a Handbook of the Board for Advance Rulings has been released by the Chairman, CBDT on 18th of August, 2023. The Handbook can be accessed at https://taxguru.in/income-tax/handbook-advance-rulings-income-tax-act-1961.html
On this occasion, Chairman, CBDT laid emphasis on the priorities of the government in the area of dispute prevention and prompt resolution of disputes. Creation of mechanisms like the Board for Advance Rulings is a step in this direction.
