Last updated: June 21st, 2023 6:23 PM

Income-tax (Ninth Amendment) Rules, 2023 - Simplified Process for Advance Ruling Applications

The Central Board of Direct Taxes (CBDT) issued Notification No. 37/2023 on 12th June 2023, introducing the Income-tax (Ninth Amendment) Rules, 2023, to amend the Income-tax Rules, 1962. The provisions of these rules came into effect on 12th June 2023. One of the key amendments made by CBDT through the Income-tax (Ninth Amendment) Rules is the modification of Rule 44E of the Income-tax Rules, 1962. Additionally, CBDT has also notified several revised application forms for obtaining advance rulings following the provisions of section 245Q of the Income-tax Act, 1961. A significant change brought about by CBDT is eliminating the mandatory digital signing requirement for Advance Ruling applications. This decision relieves taxpayers and reduces the burden on the Authority for Advance Rulings (AAR).

Synopsis of Income-tax (Ninth Amendment) Rules, 2023

The Income-tax (Ninth Amendment) Rules, 2023, introduces significant changes to the existing income tax regulations. The key highlights of these amendments are as follows:

• Elimination of Mandatory Digital Signing Requirement: The amendment to Rule 44E removes the requirement for mandatory digital signing of advance ruling applications. Applicants now have the option to submit their applications via registered email addresses without the need for digital signatures.
• Revised Application Forms for Advance Rulings: Five application forms, namely Form No. 34C to Form No. 34EA, have been amended to align with the changes in the rules. These revised forms cater to different categories of applicants seeking advance rulings.
• Replacement of Authority for Advance Rulings: The Authority for Advance Rulings has been replaced by the Board for Advance Rulings. Rule 44F has been amended to reflect this change, substituting the term "Authority" with "Board" about advance rulings.
• Flexibility in Mode of Submitting Advance Ruling Applications: Under the amended rule, applicants now have the option to submit advance ruling applications either by signing them manually or digitally. This flexibility offers convenience and streamlines the application process.

These amendments aim to simplify and enhance the process of obtaining advance rulings, providing greater flexibility to applicants while ensuring compliance with income tax regulations.

Clarification on Scope of Advance Rulings 

The amendment to the Income-tax Rules clarifies the scope of advance rulings. According to the amendment, advance rulings can now be issued on any question of law or fact pertinent to determining a taxpayer's liability to income tax. This clarification provides a broader scope for seeking advance rulings, ensuring taxpayers can obtain clarity and guidance on various legal and factual aspects of their income tax liabilities.

Amendment to Rule 44E: Removal of Mandatory Digital Signing Requirement for Advance Ruling Applications

The recent amendment to Rule 44E brings forth specific guidelines regarding the mode of submission and authorized signatory for advance ruling applications for various entities, including individuals, Hindu Undivided Families (HUFs), companies, firms, associations of persons (AOPs), and more. Furthermore, the amendment now mandates submitting application forms through the applicant's registered email address. Previously, individuals obligated to digitally sign their income tax returns were also required to submit their advance ruling applications using their digital signatures. However, the recent change allows applicants to submit their application forms via their registered email addresses, eliminating the previous mandatory requirement of digitally signing the applications for Advance Rulings.

Elimination of Mandatory Digital Signing Requirement

Under the amended rule, applicants seeking advance rulings now have the flexibility to choose between submitting signed or digitally signed applications to the Secretary of the Board for Advance Rulings (BAR) via electronic mail. This modification aims to provide applicants with greater convenience and streamline the application process. Before this amendment, individuals mandated to digitally sign their income tax returns were obliged to furnish their advance ruling applications with a digital signature. However, with this revision, the mandatory digital signing requirement has been eliminated.

Amendment to Rule 44F: Replacing "Authority" with "Board" for Advance Rulings

The CBDT has made changes to Rule 44F alongside Rule 44E. Rule 44F pertains to acquiring a certified copy of advance rulings issued by the Authority for Advance Rulings. The Board has now replaced the Authority for Advance Rulings. However, Rule 44F still refers to the advanced rulings of the former "Authority." Consequently, the amendment replaces the term "Authority" with "Board" to accurately denote the advance rulings issued by the Board for Advance Rulings.

Revised Application Forms for Obtaining Advance Rulings: Form No. 34C to Form No. 34EA

Following the revised rule eliminating the mandatory digital signing requirement, the CBDT has introduced amended forms to streamline the application process. The revised forms, namely 34C, 34D, 34DA, 34E, and 34EA, have been updated to accommodate the changes. Applicants now have the flexibility to manually sign or digitally sign these forms, allowing them to opt for the method that best suits their preference and convenience.

Form No.	Purpose
34C	Application Form for non-resident applicants seeking an advance ruling under section 245Q(1) of the Act
34D	Application Form for resident applicants seeking an advance ruling for a transaction with a non-resident under section 245Q(1) of the Act
34DA	Application Form for resident applicants seeking an advance ruling for a transaction already undertaken or proposed under section 245Q(1) of the Act
34E	Application Form for resident applicants falling within specified class or category seeking an advance ruling under section 245Q(1) of the Act
34EA	Application Form for any person seeking an advance ruling under section 245Q(1) of the Act

Alignment for Consistent and Convenient Advance Ruling Applications"

The Income-tax (Ninth Amendment) Rules, 2023, is a component of the Income-tax (Twelfth Amendment) Rules, 2022, which the CBDT issued on May 5, 2022. The CBDT implemented this revision to bring the rule and forms in line with the Income Tax Act, 1961 amendment. This alignment ensures a consistent and harmonious application process for advance rulings. The amendment underscores the CBDT's dedication to improving taxpayer convenience and alleviating unnecessary burdens.

Conclusion:

The CBDT's amendment to Rule 44E of the Income Tax Rules, 1962, removing the mandatory digital signing requirement for Advance Ruling applications, simplifies and provides convenience for applicants. Submitting signed or digitally signed applications via electronic mail provides flexibility in the process. The introduction of amended forms aligns with these changes, further enhancing the efficiency of obtaining advanced rulings. These revisions contribute to a streamlined and cost-effective procedure, benefiting taxpayers and reducing the workload on the Authority for Advance Rulings.