Budget 2017 - One Authority of Advance Ruling for Tax

February 09,2017
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Mekhla Anand, Partner, Cyril Amarchand Mangaldas
Shiladitya Dash, Associate

In a move towards converging the Direct Tax and Indirect Tax administrations and infrastructure in view of promoting the ease of doing business in India, the Government, in the budget for the Financial Year 2017-18 (‘Budget’), has sought to merge the Authority of Advance Ruling (‘AAR’) constituted to look into Indirect Tax matters with the AAR constituted to look in to the Direct Tax matters under the Income Tax Act, 1961 (‘IT Act’).

In pursuance of the same, the Finance Bill, 2017 (‘Finance Bill’) has sought to amend Section 28F of the Customs Act, 1962 (‘Customs Act’), to the effect that the AAR constituted under Section 245O of IT Act shall be the authority for giving advance rulings for the purpose of the Customs Act. Corresponding amendments have been proposed in this regard, in relation to the definitions of the term “Authority”, defined vide Section 28E(e) of the Customs Act, Section 23A(e) of the Central Excise Act, 1944 (‘CE Act’) and Section 96A(d) of the Finance Act, 1994 (‘FA’).

Consequently, the definition of “Applicant” in Section 245N of the IT Act is proposed to be expanded to include within its ambit applications for advance ruling made under the Customs Act, the CE Act and the FA. Parallel amendment to Section 245Q, relating to applications for advance ruling under the IT Act, has also been proposed.

The Finance Bill has proposed the insertion of new provisions in the Acts, in order to facilitate the transfer of pending applications before the present AAR for Central Excise, Customs and Service Tax, to the AAR constituted under the IT Act, with effect from the date on which the Finance Bill receives the assent of the President.

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