Assessment and Advance Ruling under GST by Yogya Bhatia @LexCliq

Assessment and Advance Ruling under GST


What is Advance Ruling?

An advance ruling is a written interpretation of tax laws. Generally, the advance ruling is given by authorities to individuals and organizations who are seeking clarification on certain tax matters.

One example of an advance tax would be under income tax, where advance tax is available in International taxation. Tax authorities advise the Non Residents of India on matters of income tax liability, how they can plan their income tax payments and avoid last minute rush and also avoid long legal repercussions. Advance ruling under GST is the advice given by tax authorities on matters relating to the supply of goods and services.

Why is Advance Ruling necessary to GST

GST, as we all know, was big tax reform, everyone was not fully aware of it. Even if some people knew what GST didn’t know the procedure, therefore, the concept of the advance ruling was incorporated under GST. The main objectives behind including advance ruling under GST is :

  1. To provide the tax liability of the person in advance so that the applicant can take necessary actions in the future.
  2. By providing a clear and clean taxation system the Foreign Direct Investment will also increase as the NRI’s would be investing more, as the main concern for the NRI’s is that they don’t want to get into the petty tax disputes which get resolved through the advance ruling.
  3. By providing tax advises before the process of tax collection begins, it becomes easy for the applicant to clear all his dues in a more transparent way.
  4. It also reduces the cost of litigation and avoids costly legal disputes.

Under what situations an applicant ask for Advance Ruling

The taxpayer can demand advice under an advance ruling when he is not aware of certain tax provisions. The taxpayer can ask for advice under the following circumstances:

  1. When he wants clarification on the classification of any goods and services under the act.
  2. Determination of time, value and supply of goods and services.
  3. Whether input tax paid would be allowed.
  4. If the applicant has to be registered under GST or not.
  5. Any particular thing done by the applicant falls within the ambit of supply or not.

Process of Advance Ruling Under GST

An application for advance ruling is sent to Advance Ruling Authority. A person not happy with the advance ruling can file an appeal in the appellate authority i.e an Advance Ruling Appellate Authority.

The form of Advance Ruling has been made available in form GST ARA-01 with rupees 5000.

It is up to the authority to decide whether to accept the application or reject the application. The decision of the authority is pronounced within 90 days and if the members of the authority differ on any particular point then that point of dispute shall be referred to the appellate authority.

The application of advance ruling will not be accepted if their case has already been rejected earlier and if the case is already pending in the authority then advance ruling cannot be claimed.

Time Limit on the Applicability of Advance Ruling

Their no such law which prescribes the fixed time period for which the advance ruling shall remain in force. Instead of that, the applicability shall remain in time unless the original advance ruing is replaced by a new law. So the time period for applicability of the advance ruling remains valid unless there has been a change in the law with respect to the advance ruling.


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