Section 384 · Appeals
Section 384 of the Income-tax Act, 2025 — Procedure on Receipt of an Advance-Ruling Application
By CA Rajat Agrawal
Updated 05 Jul 2026
Chapter XVIII
📜 What the law says — Section 384, Income-tax Act 2025
384. (1) On receipt of an application, the Board for Advance Rulings shall
forward a copy thereof to the Principal Commissioner or Commissioner and,
call upon him to furnish the relevant records, which shall be returned at the earliest
opportunity.
(2) The Board for Advance Rulings may, after examining the application and the
records called for either allow or reject the application by an order.
(3) For the purposes of sub-section (2), an application shall be rejected if the question
raised therein—
(a) is already pending before any income-tax authority or Appellate Tribunal
except in the case of a resident applicant falling under section 380(b)(iii)
or any court;
(b) involves determination of fair market value of any property;
(c) relates to a transaction or issue which is designed prima facie for the
avoidance of income-tax except in the case of a resident applicant falling
in section 380(b)(iii) or in the case of an applicant falling under section
380(b)(iv).
(4) The application shall not be rejected under sub-section (2), unless an opportunity
of being heard has been given to the applicant and the reasons for such rejection
are given in the order.
(5) A copy of every order made under sub-section (2) shall be sent to the applicant
and to the Principal Commissioner or Commissioner.
(6) Where an application is allowed under sub-section (2), the Board for Advance
Rulings shall, after examining such further material as may be placed before it by
the applicant or obtained by the Board for Advance Rulings, pronounce its advance
ruling in writing, on the question specified in the application within six months of
the receipt of application.
(7) On a request from the applicant, the Board for Advance Rulings shall, before
pronouncing its advance ruling, provide an opportunity of being heard to the
applicant, either in person or through a duly authorised representative.
(8) A copy of the advance ruling pronounced by the Board for Advance Rulings,
duly signed by the Members and certified in such manner, as may be prescribed
shall be sent to the applicant and to the Principal Commissioner or Commissioner,
as soon as may be, after such pronouncement.
(9) For the purposes of this section, “authorised representative” shall have the
meaning assigned to it in section 515(3)(a), as if the applicant were an assessee.
Appellate authority not to proceed in certain cases.
In plain language
What Section 384 is about
Section 384 of the Income-tax Act, 2025 lays down the step-by-step procedure the Board for Advance Rulings (BAR) must follow once it receives an advance-ruling application filed under Section 383. In plain words, it is the "process rulebook": what the Board does after your application lands, when it can throw it out, your right to be heard, and the deadline within which it must give you a written ruling. It is the successor to Section 245R of the old Income-tax Act, 1961, and carries forward almost the same scheme with modernised drafting.
Who this applies to
- Applicants seeking an advance ruling — typically non-residents planning a transaction in India, residents entering transactions with non-residents, notified resident applicants, certain PSUs, and persons seeking a ruling on whether an arrangement is an impermissible avoidance arrangement (GAAR).
- The Board for Advance Rulings (BAR) — which replaced the earlier Authority for Advance Rulings and now works in a faceless, member-based manner.
- The Principal Commissioner / Commissioner — the departmental authority whose records and views feed into the process.
The procedure, step by step
- Forwarding the application: On receipt, the BAR forwards a copy of the application to the Principal Commissioner/Commissioner and calls for the relevant records; those records must be returned at the earliest.
- Allow or reject: After examining the application and records, the Board passes an order either allowing the application (admitting it for a ruling) or rejecting it.
- Opportunity of being heard before rejection: An application cannot be rejected without first giving the applicant a hearing, and every rejection order must record the reasons in writing.
- Pronouncing the ruling: Where the application is allowed, the Board examines any further material placed by the applicant or gathered by it, and pronounces a written ruling on the specified question within six months of receipt of the application.
- Hearing on request: If the applicant asks, the Board must give an opportunity to be heard — in person or through an authorised representative — before pronouncing the ruling.
- Communication: A copy of the ruling, signed by the Members and certified as prescribed, is sent to the applicant and to the Principal Commissioner/Commissioner as soon as possible.
Key conditions / grounds for rejection
The Board must reject an application where the question raised:
- Is already pending before any income-tax authority, the Appellate Tribunal or any court (with a limited relaxation for certain notified resident applicants);
- Involves determination of the fair market value of any property; or
- Relates to a transaction or issue designed prima facie for the avoidance of income-tax — except where the applicant is a notified resident, or where the very question referred is whether an arrangement is an impermissible avoidance arrangement (GAAR rulings).
How it interacts with related sections
- Section 383 is where you actually file the application (in the prescribed form with fee) — Section 384 governs what happens next.
- Section 385 makes the pronounced ruling binding on the applicant and the tax authorities for that transaction.
- Section 386 allows a ruling to be declared void if obtained by fraud or misrepresentation.
- The six-month clock and hearing safeguards mirror the old Section 245R, so precedents under the 1961 Act remain broadly relevant.
Practical implications for taxpayers
- Certainty with a deadline: you get a written, reasoned decision on your tax question within six months — far faster than ordinary litigation.
- Clean up your facts first: if the same question is already pending in assessment, appeal or court, or if it needs a property valuation, expect rejection — plan the timing of your application accordingly.
- Natural justice is built in: you cannot be rejected unheard, and you can demand a personal hearing before the ruling itself.
- Faceless working: the BAR operates through members and prescribed rules; keep documentation complete because further material may be called for.
💡 Example
Worked example 1 — the six-month clock. A German company, GmbH-Tech, files an advance-ruling application on 10 April 2026 asking whether its proposed royalty income from an Indian licensee will be taxable in India under the India-Germany treaty. The BAR forwards the application to the Commissioner, calls for records, and admits it after a hearing. Under Section 384, the Board must pronounce its written ruling by around 10 October 2026 — six months from receipt. GmbH-Tech can structure its licensing agreement with confidence once the binding ruling arrives, instead of waiting years for an assessment and appeals.
Worked example 2 — rejection ground. Mr. Sharma, a resident, files an application asking the Board to fix the fair market value of a Mumbai commercial property he plans to sell to a non-resident buyer. Because Section 384(3) bars questions that involve determination of fair market value of property, the Board — after giving Mr. Sharma a hearing — passes a reasoned order rejecting the application. He must instead obtain a registered valuer's report and, if needed, litigate valuation in the normal channel.
A short story. Priya runs a startup that is about to receive a large investment from a Singapore fund. Nervous about whether withholding tax applies, she files for an advance ruling. Two weeks later she panics — she remembers the same issue is faintly touched in a pending assessment. She calls her CA, who explains that under Section 384 the Board can reject a question already pending before an authority, but only after hearing her. At the hearing Priya clarifies that the pending matter concerns a different year and transaction, the Board is satisfied, admits the application, and delivers a binding ruling in five months — giving her fund the comfort it needed to close.
| Aspect | What Section 384 provides | Old law (Section 245R, 1961 Act) |
|---|
| Trigger | Receipt of application filed under Section 383 | Receipt of application under Section 245Q |
| First step | Forward copy to Pr. Commissioner/Commissioner; call for records | Same |
| Decision | Order allowing or rejecting the application | Order allowing or rejecting |
| Reject if question is pending | Yes — before any income-tax authority, Tribunal or court (limited relaxation for notified residents) | Yes |
| Reject if fair market value of property involved | Yes | Yes |
| Reject if prima facie tax avoidance | Yes, except notified residents and GAAR-question applicants | Yes (with exceptions) |
| Hearing before rejection | Mandatory; reasons recorded in order | Mandatory |
| Time limit to pronounce ruling | Within 6 months of receipt of application | 6 months |
| Hearing before ruling | On applicant's request; in person or through authorised representative | Same |
| Communication of ruling | Signed & certified copy to applicant and Commissioner | Same |
Related sections
Section 383 — Application for advance ruling (form and fee) Section 385 — Advance ruling to be binding Section 386 — Advance ruling to be void in certain circumstances Section 382 — Board for Advance Rulings and its powers Section 245R (1961 Act) — Old procedure on receipt of application Section 381 — Definitions relating to advance rulings
Frequently asked questions
What does Section 384 of the Income-tax Act, 2025 actually cover?
It sets out the procedure the Board for Advance Rulings follows after receiving an application under Section 383 — forwarding it to the Commissioner, allowing or rejecting it, giving a hearing, and pronouncing a written ruling within six months.
How long does the Board take to give an advance ruling?
Once an application is admitted, the Board must pronounce its written ruling on the specified question within six months of receiving the application.
Can my advance-ruling application be rejected without hearing me?
No. Section 384 says an application cannot be rejected unless you are first given an opportunity of being heard, and the rejection order must record the reasons in writing.
On what grounds can the Board reject my application?
Mainly if the same question is already pending before a tax authority, Tribunal or court, if it involves determining the fair market value of property, or if the transaction is prima facie designed for tax avoidance — subject to specified exceptions for notified residents and GAAR questions.
Do I get a personal hearing before the ruling is pronounced?
Yes, if you request it. The Board must give you an opportunity to be heard — either in person or through a duly authorised representative — before pronouncing the ruling.
Is Section 384 different from the old Section 245R of the 1961 Act?
Broadly no. It carries forward the same scheme — record call, allow/reject, mandatory hearing, six-month timeline and communication — with modernised drafting under the faceless Board for Advance Rulings framework.
Who receives a copy of the final ruling?
A copy signed by the Members and certified as prescribed is sent both to the applicant and to the Principal Commissioner or Commissioner as soon as possible after pronouncement.
C
CA Rajat Agrawal
Chartered Accountant, EaseValue · Reviewed 05 Jul 2026
This explainer is prepared and reviewed by EaseValue's tax team, based on the text of the Income-tax Act, 2025 (as amended by the Finance Act, 2026).
Disclaimer: This page explains the law in general terms for education and is not professional advice. The Income-tax Act, 2025 takes effect from 1 April 2026; provisions, thresholds and interpretations may change. Please confirm your specific position with our team before acting.
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