Advance ruling before income tax

Can individual apply for advance ruling before Income Tax authority
Replies (1)

Yes, an individual can apply for an Advance Ruling before the Income Tax Authority in India, but only under certain conditions.

✅ What is an Advance Ruling?

An Advance Ruling is a written decision provided by the Authority for Advance Rulings (AAR) or the Board for Advance Rulings (BAR) to an applicant on questions of law or fact in relation to their income tax liability. It helps in tax planning and provides certainty before undertaking a transaction.


🧑‍⚖️ Who Can Apply?

Under Section 245N to 245V of the Income Tax Act, the following persons can apply for an Advance Ruling:

  1. A non-resident (individual, company, etc.) in relation to their income tax liability.

  2. A resident individual or entity having a transaction with a non-resident.

  3. A resident individual/entity with a proposed transaction valued above a specified threshold.

  4. As of recent amendments (Finance Act, 2021), the Board for Advance Rulings (BAR) replaces AAR for residents.

So, an individual can apply if:

  • They are a non-resident, or

  • A resident having a transaction with a non-resident, or

  • Fall under the specified categories notified by CBDT.


❌ Who Cannot Apply?

  • Individuals involved in cases pending before income tax authorities, Appellate Tribunal, High Court or Supreme Court on the same issue.

  • Individuals whose question involves valuation, or is hypothetical in nature.


📝 How to Apply?

  • File Form 34C (for non-residents) or Form 34D/34DA (for residents).

  • Submit to the Board for Advance Rulings.

  • Pay prescribed fee (generally ₹10,000 or ₹2 lakhs depending on case).


⚖️ Recent Change:

From 1st April 2021, due to delays in AAR functioning, the government constituted BAR (Board for Advance Rulings), and rulings are now appealable before the High Court.


📌 Summary:

Criteria Can Individual Apply?
Non-resident individual ✅ Yes
Resident with non-resident dealings ✅ Yes
Purely resident transactions ⚠️ Limited scope

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