Direct Taxation

Central Board of Direct Taxes amends the Income-tax Rules, 1962 for faster resolution of disputes in terms of tax treaties

06.05.2020

The Central Board of Direct Taxes amends the Income-tax Rules, 1962 aiming to speed-up dispute resolution and settle cases of multinational corporations (MNCs) that have opted for mutually agreeable procedure (MAP). The new amended rule brings in hope and certainty for faster resolution of disputes instead of chronic litigation process. The amendment will make it easier for Assessees, particularly MNCs operating in the country, to resolve their dispute with the tax department in a time-bound manner and as per the terms of tax treaties existing between the two Countries. These notified rules are termed as Income-tax (8th Amendment) Rules, 2020.

As per the amended Rule 44G, if an Assessee, being a resident of India, is aggrieved by any action of the tax authorities of any country or specified territory outside India may make an application to the Competent Authority of India seeking to invoke the mutual agreement procedure, if provided in such agreement, in Form No. 34F. The Competent Authority shall endeavour to arrive at a mutually agreeable resolution of the tax disputes, arising from such actions of the income-tax authorities, in accordance with the agreement between India and the other country or specified territory within an average time period of twenty-four months.

If a resolution is arrived at between the Competent Authority in India and that of the other country or specified territory, the same shall be communicated in writing to the Assessee. The Assessee is required to give consent, either accepting or rejecting the resolution within 30 days, if mutually agreeable dispute resolution has reached. MAP is an alternative dispute resolution mechanism under the tax treaties is popularly used to resolve the dispute relating to tax matters.

Tags : Rules Amendment Dispute resolution

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