Amendment to Rule 44E in line with BEPS Action 5 : CBDT Draft Notification

By | April 10, 2018
(Last Updated On: April 10, 2018)

F.No.370142/34/2016-TPL (Part)
Government of India
Ministry of Finance
Department of Revenue
(Central Board of Direct Taxes)

New Delhi, April 10, 2018

Sub: Draft notification proposing an amendment to rule 44E, Form 34C, 34D and 34DA as per BEPS action item 5, for improving transparency in relation to tax rulings– comments and suggestions-reg.

Under Base Erosion and Profit Shifting (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.

2. Further, vide Finance Act, 2017; the definition of the term “applicant” for the purpose
of Advance Rulings has been amended 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.

3. In view of the above and in exercise of the powers conferred by section 295 read with
sub-section (1) of section 245Q of the Income-tax Act, 1961 (43 of 1961), an amendment of
the Income-tax Rules, 1962 (the Rules) is proposed so as to bring an amendment in the rule
44E and Form 34C, Form 34D and Form 34DA. The draft proposal is as under:-

“1. In the Income-tax Rules, 1962,―
(I) in Rule 44E, in sub-rule (1),―
(i) in clause (c), for the words, brackets and letters “sub-clause (iia) of clause (b)”, the
words, brackets and letters “item (III) of sub-clause (A) of clause (b)” shall be
substituted;
(ii) in clause (d), for the words, brackets and letter “sub-clause (iii) of clause (b)”, the
words, brackets and letters “item (IV) of sub-clause (A) of clause (b)” shall be
substituted;

(iii) in clause (e), for the words, brackets and letters “sub-clause (iiia) of clause (b)”,
the words, brackets and letters “item (V) of sub-clause (A) of clause (b)” shall be
substituted;
(II) in the Appendix II, in Form 34C,―
(a) in the title, for the words “Form of application” the words “Form of application by
a non-resident applicant” shall be substituted;
(b) after item 13, the following items may be inserted, namely:―
“14. Taxpayer Registration Number/ Taxpayer Identification Number/ Functional
equivalent/ Any unique number used for identification by the Government of that
country/specified territory of which applicant claims to be a resident.

Download Complete Draft Notification in PDF

 

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