The Finance ministry has notified the ‘E-ADVANCE RULINGS SCHEME’, enabling taxpayers to file their application for advance ruling through email, a move that will majorly benefit non-resident assesses in such proceedings. The ‘E-ADVANCE RULINGS SCHEME, 2022’, notified by the Central Board of Direct Taxes (CBDT), further provides that hearing before the Board for Advance Rulings will be conducted through video conferencing/ video telephony, where taxpayers would be granted an appropriate opportunity of being heard.
Advance Rulings Under Income Tax Act
Advance rulings are written authoritative decisions or opinions by an authority empowered to give them regarding tax consequences of transactions, including proposed ones. In the Finance Act, 2021, the government made provisions for setting up one or more boards for advance rulings, replacing the authority for advance rulings.
What Is E Advance Ruling Scheme?
The advance ruling mechanism is provided in the Income Tax Act to provide upfront clarity to non-residents and certain other specified taxpayers, regarding the taxability of their transactions in India under Indian I-T laws.
About The Scheme
- The scheme provides that all communications between the taxpayer/ income tax authorities and the Board for Advance Rulings will take place in electronic mode.
- Every notice or order or any other electronic communication under this scheme from the Board for Advance Rulings will be delivered to the applicant by sending an e-mail to the registered email address of the applicant or his authorized representative.
- The proceedings before the Board for Advance Rulings shall not be open to the public. No person other than the applicant, his employee, the concerned officers of the Board for Advance Rulings, the Income-tax authority, or the authorized representatives shall remain present during such proceedings, even on video conferencing or video telephony.
Benefits Of The Scheme
The scheme of advance rulings, thus has the following distinct advantages since it ensures:
- Clarity and certainty of the tax liability under the Central Excise, Customs and Service Tax laws in advance in relation to an activity production or manufacture of goods under the Central Excise Act and service to be provided under Finance Act
- Finality and thereby avoidance of protracted litigation.
- Speedy decisions.
- Inexpensive process.
- Easy Online Platform
Who Can Apply For The Scheme?
- A non-resident setting up a joint venture in India in collaboration with a non-resident or a resident;
- A resident setting up a joint venture in India in collaboration with a non-resident; or
- A wholly owned subsidiary Indian company, of which the holding company is a foreign company.
- A joint venture in India.
According to some experts an e-advance ruling scheme for making applications, all correspondences through e-mail/ electronic mode and also conducting hearings through videoconferencing will help non-resident applicants participate in these proceedings through electronic mode without the need to travel physically.
The Income Tax Act provides an advance ruling mechanism to give upfront clarity to specified taxpayers and non-residents regarding the taxability of their transactions in India under the Income Tax laws.
It is helpful considering that the majority of applicants for an advance ruling are non-residents situated outside India, he added. However, implementation will be key to the success of the scheme and the authorities would need to ensure that adequate opportunity of hearing, albeit through video conferencing, is provided to the applicants.