Indian Income Tax Law | Updated 27 October 2026

Section 245N of the Income-tax Act, 1961: Definitions for Advance Rulings

Section 245N is the definitions provision in Chapter XIX-B, which governs advance rulings. It explains the meaning of an advance ruling, who may apply and which institution deals with the application. The corresponding provision under the Income-tax Act, 2025, effective from 1 April 2026, is Section 380.

Definitions under Section 245N

Clause (a): Advance ruling

An advance ruling is a determination on specified questions of law or fact relating to a transaction undertaken or proposed by an eligible applicant. The statutory categories include:

1. Section 245N(a)(i): a transaction undertaken or proposed by a non-resident applicant.
2. Section 245N(a)(ii): the tax liability of a non-resident arising from a transaction undertaken or proposed by a resident with that non-resident.
3. Section 245N(a)(iia): the tax liability of a qualifying resident applicant in relation to the applicant's own transaction.
4. Section 245N(a)(iii): a question concerning computation of total income pending before an income-tax authority or the Appellate Tribunal, subject to the applicable statutory requirements.
5. Section 245N(a)(iv): whether a proposed arrangement is an impermissible avoidance arrangement under Chapter X-A, the general anti-avoidance rules (GAAR).

The provision also contains a historical saving proviso concerning certain advance rulings issued before the Finance Act, 2003 received Presidential assent. Its relevance is principally to the binding effect of those earlier rulings.

Clause (b): Applicant

An applicant is a person within the classes prescribed by the provision who makes an application under Section 245Q(1). Not every resident taxpayer is automatically eligible; eligibility depends on the applicable category, notification and facts.

Clause (c): Application

An application is a request for an advance ruling under Section 245Q(1), made to the competent advance-ruling institution. The Finance Act, 2021 amended the definition to recognise the Board for Advance Rulings.

Clause (ca): Board for Advance Rulings

The Board for Advance Rulings is the Board constituted by the Central Government under Section 245-OB of the 1961 Act. It forms part of the post-2021 framework for advance rulings.

Clauses (d) to (g): Authority and officeholders

The historical definitions identify the Authority for Advance Rulings constituted under Section 245-O, its Chairman, Members and Vice-chairman. The amended definition of Member also includes a Member of the Board for Advance Rulings. These terms must be read in light of the institutional transition.

Who can seek an advance ruling?

Depending on the statutory category, applications may concern a non-resident's transaction, a resident's transaction with a non-resident, a notified category of resident applicants, or a proposed arrangement potentially falling within GAAR. The applicant must identify a specific question and satisfy the procedural and admissibility conditions.

Finance Act, 2021 and Income-tax Act, 2025

The Finance Act, 2021 introduced the Board for Advance Rulings and made related changes to the definitions and procedure. From 1 April 2026, the Income-tax Act, 2025 provides the corresponding definitions in Section 380, with the Board constituted under Section 381 and applications addressed under Section 383.

The Income Tax Department explains that the new Act consolidates and renumbers the advance-ruling framework without substantive or procedural change. Pending applications under the 1961 Act are addressed through the saving provisions in Section 536(2) of the 2025 Act.

Practical points for taxpayers

• Identify the tax year and whether the 1961 or 2025 Act governs the relevant issue.
• Confirm the applicant's statutory eligibility before preparing an application.
• State the proposed or completed transaction and the precise question of law or fact.
• Review the relevant application, admissibility and appeal provisions, including the applicable rules and prescribed forms.
• For legacy cases, check whether the matter was pending at commencement of the 2025 Act and whether a saving provision applies.

Frequently asked questions

What does Section 245N define?

It defines advance ruling, applicant, application and the institutions and officeholders used in Chapter XIX-B of the Income-tax Act, 1961.

What is the corresponding provision in the Income-tax Act, 2025?

Section 380 contains the corresponding advance-ruling definitions, with the Board for Advance Rulings framework continued under the newer Act.

Can an individual resident apply for an advance ruling?

Only if the individual falls within a statutory category of eligible applicants and meets the applicable conditions; residence alone is not sufficient.

Official legislation and guidance

• Income Tax Department: Section 245N, Income-tax Act, 1961
• Income Tax Department: Section 245N statutory text
• Income Tax Department: 2025 Act, appeals and advance-ruling FAQs
• Official section correspondence navigator (Section 245N to Section 380)
• Income Tax Department: Handbook on Advance Rulings

This article is general legal information. For a particular transaction, consult the current legislation, notifications and procedural rules.