How Does the Advance Ruling Work?
Any advance tax ruling is a written interpretation of tax laws. Tax authorities issue it to corporations and individuals who request for clarification of certain tax matters. An advance ruling is often requested when the taxpayer is confused and uncertain about certain provisions. Advance tax ruling is applied for: before starting the proposed activity.
For example, an advance ruling can be used in income tax. It is our goal to assist non-residents in determining their income tax liability, planning ahead, and avoiding protracted and expensive legal battles. Generally, advance rulings are written decisions issued by the tax authority regarding the supply of goods or services.
In GST, what is the purpose of an advance ruling?
GST advance rulings are intended to:
- Ensure that the applicant is aware of their tax responsibilities before engaging in a future activity.
- Attract FDI (Foreign Direct Investment) by increasing transparency in taxation and identifying FDI’s future tax liabilities.
- Clarity and simplicity of the tax system will appeal to non-residents who don’t want to get entangled in tax disputes.
- Reduce the amount of time and money spent in the court system.
- Making decisions should be transparent and cost-effective.
Can one request an advance ruling on GST?
A taxpayer can request an advance ruling if he is unsure of the provisions. Advance rulings are valid for two years.
- In accordance with the Act, all goods and services must be classified
- according to the tax rate
- and their value
- the input tax credit is claimed or deemed to be claimed
- for goods and services that are tax liable
- in accordance with the law? Does the applicant have to be registered with GST?
- A supply of goods or services will result from the applicant’s actions.
What to do after you receive an application
- The prescribed officer receives a copy of the application and provides all the records.
GST rulings are advanced through a process
The Authority for Advance Ruling receives the advance ruling first. The Appellate Authority for Advance Ruling (Appellate Authority) may be contacted by those dissatisfied with the advance ruling.
To request an advance ruling, you must submit FORM GST ARA-01.
Decision of the authority
The authority may accept or reject the application by order.
Are all applications considered?
Any of the following conditions must be met for the application to be accepted:
- The applicant has already been adjudicated on the same issue in another case
- at this time.
Applications will not be rejected unless they have been heard. Rejection reasons must be written down.
The decision on the advance ruling will be made within 90 days of the application. If the Authority members disagree on a point, the matter will be referred to the Appellate Authority.
Who will be affected by the advance ruling?
The advance ruling will only be binding on the applicant and the jurisdictional tax authorities in respect of the applicant. The advance ruling will no longer be valid if the law or facts in the original advance ruling change.
The applicant may appeal the advance ruling if he is unsatisfied with it.