Advance ruling under GST

An Advance Ruling under GST (Goods and Services Tax) is a legal opinion or decision given by an authority on GST-related issues or transactions. It is a mechanism provided under the GST regime to help taxpayers in making an informed decision about their tax liabilities and compliance requirements.

The Advance Ruling Authority (ARA) is a quasi-judicial body appointed by the government, which is responsible for providing advance rulings on various GST matters. The ARA is usually composed of one or more members who are experts in the field of taxation, accounting, or law.

Let us understand a bit more about the advance ruling under GST further in this article

Why is an advance ruling under GST necessary?

Advance ruling under GST (Goods and Services Tax) is necessary to provide clarity and certainty to taxpayers regarding the tax treatment of their transactions. An advance ruling is a written decision given by the tax authorities to an applicant on specific questions related to the interpretation or application of the GST law.

Here are some reasons why the advance ruling is necessary under GST:

1. Clarity: Advance ruling helps in avoiding any ambiguity or confusion in the interpretation of the GST law. It provides clarity to taxpayers regarding the tax implications of their transactions, which helps them in making informed business decisions.

2. Consistency: Advance ruling ensures consistency in the interpretation and application of the GST law. It helps in avoiding any inconsistencies or contradictions in the decisions taken by different tax authorities.

3. Time-saving: Advance ruling saves time for both taxpayers and tax authorities. Taxpayers can avoid lengthy and costly disputes with the tax authorities by obtaining an advance ruling. Similarly, tax authorities can save time by providing a clear and definitive answer to the taxpayer's questions through an advance ruling.

4. Compliance: Advance ruling encourages compliance with the GST law. It helps taxpayers in avoiding unintentional non-compliance and penalties by providing them with a clear understanding of the tax implications of their transactions.

Overall, advance ruling under GST is necessary to provide certainty and clarity to taxpayers, ensure consistency in the application of the GST law, save time, and encourage compliance with the law.

When can one request for GST Advance Ruling?

A person can request a GST Advance Ruling when they have a specific question or doubt regarding the GST law and its application to their business or transaction. The GST law provides for the following situations where a person can request an advance ruling:

1. Applicability of a notification, circular, or order issued by the GST Council: A person can request an advance ruling to determine the applicability of a notification, circular, or order issued by the GST Council.

2. Liability to pay GST: A person can request an advance ruling to determine whether a particular activity or transaction is liable to pay GST or not.

3. Classification of goods or services: A person can request an advance ruling to determine the correct classification of goods or services under the GST law.

4. Valuation of goods or services: A person can request an advance ruling to determine the correct valuation of goods or services under the GST law.

5. Input tax credit: A person can request an advance ruling to determine the eligibility to claim an input tax credit under the GST law.

6. Registration under GST: A person can request an advance ruling to determine whether they are required to register under the GST law or not.

It is important to note that the person requesting an advance ruling must be registered under the GST law and should not have committed any violation under the GST law. The application for an advance ruling should also be made before the commencement of the activity or transaction.

FAQS

1. Who can apply for an advance ruling under GST?

Any registered person or entity who has a specific question or doubt regarding the interpretation or application of the GST law can apply for an advance ruling.

2. What is the time limit for the GST authority to issue an advance ruling?

The GST authority is required to issue an advance ruling within 90 days from the date of application. However, if the authority is unable to issue the ruling within 90 days, it can pass an order to extend the time limit by a further period not exceeding 90 days.

‍3. Is an advance ruling binding on the applicant and the GST authority?

Yes, an advance ruling is binding on the applicant and the GST authority. However, the ruling applies only to the specific transaction or activity for which it was sought.