Advance Ruling Generally non residents do not want to take any risks regarding their income taxes as because litigation in India is a huge process in itself. Its always better to plan. In this regard if the non resident is entering into any transaction within India then he may go for an advance ruling regarding the taxability perspective of the transaction he is making in India. In this regard advance ruling is very helpful. This article is basically on advance ruling and its process. Advance ruling means 1)      A determination by the authority in relation to a transaction which has been undertaken or is proposed to be undertaken by a non resident applicant or 2)      A determination by the authority in relation to the tax liability of a non resident arising out of a transaction which has been undertaken or is proposed to be undertaken by a resident applicant with such non resident. It shall include the determination of any question of law. 3)      A 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. 4)      A determination or decision by the authority whether an arrangement, which is proposed to be undertaken by any person being a resident or a non resident. Applicant Any person who is non resident or is resident falling within such class as notified by the central government. For this purpose Central government has notified the following residents as applicants:- 1)      Public sector company 2)      Person seeking advance ruling to the tax liability of a non resident arising out of a transaction undertaken or proposed to be undertaken by him with a non resident. 3)      Resident or non resident in relation to avoidance arrangement application How to Apply 1)      Applicant shall submit four copies of application in the prescribed form and manner with an application fee Rs. 10000/- or such fees as may be prescribed in this behalf, whichever is higher. 2)      The applicant is at liberty to withdraw the application within 30 dyas from the date of such application. 3)      The authority shall forward one copy of the application to the CIT. It can require the CIT to furnish the relevant records. 4)      After examination of the application and records forwarded by the CIT, the authority shall either allow or reject the application. 5)      Section 245R(2) – The authority may, after examining the application and the records called for, by order, either allow or reject the application. The Authority shall not allow the application where the question raised in the application:- a)      Is already pending before any income tax authority or Appellate tribunal, except in case of resident applicant applying for determination of his tax liability. b)      Involves determination of fair market value of any property. c)       Relates to a transaction or issue which is designed prima facie for the avoidance of income tax 6)      If the application is allowed, the authority shall prounounce its ruling on the question raised by the applicant after examining further material either placed by the applicant or obtained by the authority. 7)      Before prounouncing the advance ruling, the authority shall give an opportunity to the applicant of being heard either in person or through or authorized representative. 8)      A period of six months from the date of recipt of th application is available. 9)      A certified copy of the advance ruling pronounced shall be sent to the applicant and the concerned CIT Scope of Applicability of the ruling The advance ruling pronouncement is binding only on the applicant and the concerned CIT including its subordinate Income Tax Authorities only in respect of the transaction for which ruling had been sought. Moreover the advance ruling is subject to subsequent change in law/facts. Recently Supreme court has taken a view that even an order of advance ruling is still applicable.