Who can seek advance ruling?

Any non-resident person whether individual, company, firm, association of persons or other body corporate can make an application for seeking an advance ruling in regard to his/its tax liability. Similarly, certain category on residents can also seek advance rulings:

1. For Non-resident

For determination, in relation to a transaction which has been undertaken or is proposed to be undertaken by a Non-resident applicant, on any question of law or fact specified in the application.

2. For Resident

1. A resident who has undertaken or proposes to undertake a transaction with a non-resident may seek a ruling for determination on any question of law or fact in relation to such transaction involving the tax liability of the non resident.
2. A resident falling within notified categories may seek determination or decision by the Authority in respect of an issue relating to computation of total income which is pending before any Income-tax Authority or the Appellate Tribunal and such determination or decision shall include the determination or decision of any question of law or fact relating to such computation of total income.

(Central Government vide Notification No. 11456 dated 3.8.2000 as specified public sector company as defined in clause (36A) of section 2 of the Income-tax Act being such class of persons under section 245 N(b)(iii) of Chapter XIX B of the Act.)

WHO IS A NON RESIDENT?

• Under the existing provision of the Income Tax Act, 1961(Section 6) the taxable entities are broadly divided into three groups, viz., Individual, Company and all other persons such as Hindu Undivided Family, Firm, Association of Persons, etc.
• These taxable entities are divided into three categories depending upon their residential status. These categories are :-
• Resident,
• Resident but not ordinary resident and
• Non - Resident
• As already explained above, the benefit of seeking advance ruling is now also available to certain residents:-
An individual is a ' resident ' in any previous year:
1. If he has been in India during the previous year for 182 days or more.
2. If the individual (not being one of the categories mentioned in Para 3 below) has been in India during the previous year for less than 182 days but has been in India for an aggregate of 365 days or more in the four years preceding the previous year and his stay in India during the previous year is 60 days or more.
3. The categories of person mentioned above are:
a) a citizen of India who has left India during the previous year as a member of the crew of an Indian Ship or for the purpose of employment outside India , and
b) a citizen of India or a person of Indian origin* who, being outside India , has come to India on a visit during the previous year.
4. Persons falling under Para 3 are resident only if their stay in India during the previous year is 182 days or more even where the duration of their stay in India during the earlier four years is 365 days or more.
* A person of Indian origin is one if he, or either of his parents or any of his grand parents, was born in undivided India.
Individuals, who are not resident in accordance with the above, are treated as non resident under the Income Tax Act.

• COMPANY:
A company is a non resident if it is neither an Indian company nor a company the control and management of whose affairs during the previous year, is situated wholly in India.

• EVERY OTHER PERSON:
Every other person is a non resident if, during a previous year, the control and management of its affairs is wholly situated outside India. In respect of any source of income in any previous year, he shall be deemed to be resident in India in respect of his other sources of income in the previous year.