In a bid to modernize and streamline the process of advance rulings, the Central Board of Direct Taxes (CBDT) took a significant step by forming three Boards for Advance Rulings in September 2021. This move aimed to provide taxpayers with a more efficient, transparent, and accountable approach to obtaining advance rulings.
Subsequent to this development, the CBDT introduced the Scheme of E-advance Ruling through Notification No. 07 of 2022. The primary goal of this scheme is to facilitate the entire process of advance rulings with minimal physical interaction while boosting effectiveness, transparency, and accountability.
The operationalization of the Boards for Advance Rulings in Delhi and Mumbai marked a milestone in this endeavor. These Boards commenced operations via email-based procedures and conducted hearings through video conferencing, making the entire process more accessible and streamlined.
One of the noteworthy advantages of this scheme is that it provides non-resident investors with a tool to ascertain their income tax liability even before they embark on investments in India. Resident entities are also beneficiaries, as they can seek rulings on the taxability of transactions, potentially saving them from lengthy litigation. Moreover, the scheme extends to resident taxpayers seeking advance rulings on tax liability arising from transactions valued at Rs. 100 crores or more in total.
The scheme also holds value for Public Sector Undertakings, offering them the opportunity to obtain advance rulings on questions of law or fact that are pending before income-tax authorities or the Appellate Tribunal.
To guide taxpayers in understanding the procedure to seek Advance Rulings, the Chairman of CBDT released a comprehensive Handbook of the Board for Advance Rulings on August 18, 2023. This Handbook serves as a resource to navigate the process and can be accessed on the official Income Tax India website.
On this occasion, the Chairman of CBDT emphasized the government’s priority in the realm of dispute prevention and swift dispute resolution. The establishment of mechanisms like the Board for Advance Rulings aligns with this focus, reflecting a step towards fostering a tax ecosystem that is more efficient, transparent, and responsive to the needs of taxpayers.
