An advance tax ruling is a tool for multinational corporations, and for individual taxfilers for clarifying and conforming particular taxation arrangements. A written interpretation of tax laws is issued by tax authorities to corporations and individuals who request clarification of taxation arrangements. An advance tax ruling binds tax authorities to comply with the tax arrangements set out in the ruling. Advance tax rulings are common in numerous countries. To facilitate foreign investment into the country a number of steps has been taken by Government of India in recent period. Setting up an Authority for Advance Rulings, Customs & Central Excise to give binding Rulings, in advance, on Customs, Central Excise and Service Tax matters pertaining to an investment venture in India is one such measure. The legal provisions relating to Advance Rulings have been introduced in the respective Statutes through the Finance Acts of 1998, 1999 and 2003. The scheme of Advance Rulings has assumed special significance in the context of greater emphasis on FDI.