Section 383 of the Income-tax Act, 2025 — Application for Advance Ruling (Form 120)

In plain language

What Section 383 is about

Section 383 of the Income-tax Act, 2025 is the provision that tells you how to actually file an application to get an advance ruling from the Board for Advance Rulings (BAR). An "advance ruling" is a binding written decision from the tax authorities on how the law will apply to a particular transaction before a dispute arises — so you get certainty in advance instead of fighting an assessment later.

Section 383 is a short, procedural section. It has three sub-sections:

• 383(1) — the application: Anyone who wants an advance ruling may apply in the prescribed form and manner, clearly stating the question on which the ruling is sought.
• 383(2) — form and fee: The application must be made in quadruplicate (four copies) and be accompanied by a fee of ₹10,000 or such higher fee as prescribed by the rules.
• 383(3) — withdrawal: The applicant may withdraw the application within 30 days from the date of the application.

The actual form is Form No. 120, prescribed under Rule 200 of the Income-tax Rules, and in practice it is filed online through the Income Tax e-Filing portal.

Where it fits in the 2025 Act

The entire advance ruling framework sits in Sections 380 to 389 of the 2025 Act. This block replaces the old Chapter XIX-B (Sections 245N to 245V) of the Income-tax Act, 1961. Section 383 is the direct successor to the old Section 245Q (application for advance ruling). Section 380 defines "advance ruling" and "applicant"; Section 381 constitutes the Board for Advance Rulings (which replaced the earlier Authority for Advance Rulings/AAR); and later sections deal with procedure, binding effect and appeals.

Who can apply

Under Section 380, an "applicant" broadly means:

• Non-residents who have undertaken or propose to undertake a transaction in India;
• Residents who have entered into (or propose to enter into) a transaction with a non-resident, on questions about the non-resident's tax liability;
• Residents falling in a class or category notified by the Central Government (this is how public sector undertakings and certain resident applicants above a transaction threshold get covered);
• Any person — resident or non-resident — seeking a ruling on whether a proposed arrangement is an impermissible avoidance arrangement (GAAR) under Chapter XI.

Key conditions and what you must state

• State a specific question. The application must set out the exact question of law or fact relating to the transaction. Vague or hypothetical questions are not entertained.
• No pending dispute. In the verification you must declare that the same question is not already pending before any income-tax authority, the Appellate Tribunal or any court. This is a critical bar — you cannot use advance ruling to run a parallel track to litigation.
• Correct fee. The base fee in the Act is ₹10,000, but the rules prescribe much higher fees for large transactions (see the table below). Proof of fee payment is a mandatory attachment.
• Transaction-based. One application generally covers one transaction; supporting documents such as group structure, beneficial ownership and the legal interpretation you rely on must be disclosed.

Practical implications

Section 383 gives taxpayers — especially non-residents and cross-border investors — a route to lock in tax certainty before executing a deal. A favourable ruling binds both the applicant and the tax department for that transaction, avoiding years of litigation. The 30-day withdrawal window in 383(3) is a useful safety valve: if you realise the facts have changed or you filed prematurely, you can pull the application out without prejudice within a month. After 30 days, withdrawal is generally not permitted. Because the ruling is binding and appealable only to the High Court, the application must be drafted carefully — an imprecise question can produce a ruling that hurts you.