UNDER the BEPS Action 5, exchange of Permanent Establishment (PE) rulings (by Authority for Advance Rulings) are required to be done not only with the countries of residence of all related parties with whom taxpayer enters into transaction but also with the country of residence of the immediate parent company and the ultimate parent company. Therefore, in order to implement the recommendations made under Action 5 of BEPS Action Plan to bring greater transparency in cross national transactions, Form 34C and 34D (Forms for advance rulings) are required to be modified so that details such as name, address and country of the residence of non-resident’s immediate parent company or ultimate parent company are captured at application stage itself.

India vide Finance Act, 2017, amended the definition of the term "applicant" for the purpose of Advance Rulings by substituting the clause (b) of section 245N of the Income-tax Act, 1961 (the Act). Therefore, consequential amendment is necessitated in Rule 44E and respective Forms to bring them in harmony with the amendment to the Act. To do so, the CBDT has issued a Draft Notification proposing changes in the Rule 44E and Form 34C, Form 34D and Form 34DA and has sought feedback from taxpayers.

(Click here for details of Draft Notification)