The Approving Panel is the final authority in the GAAR reference process, responsible for determining whether an arrangement constitutes an impermissible avoidance arrangement. Rule 131 of the Income Tax Rules, 2026 establishes a structured procedure for the Approving Panel .
Composition of the Approving Panel
The Approving Panel consists of three members including a Chairperson:
- Chairperson: A person who is or has been a judge of a High Court
- Member 1: A member of Indian Revenue Service not below the rank of Principal Chief Commissioner or Chief Commissioner
- Member 2: An academic or scholar having special knowledge of direct taxes, business accounts, and international trade practices
Procedure Before the Approving Panel
Circulation of Reference
Upon receipt of a reference, the Chairperson must cause the reference to be circulated among the other members within seven days from the date of receipt of such reference .
Issuance of Notice
The Chairperson must issue a notice to both the Assessing Officer and the assessee, affording an opportunity of being heard, specifying the date and place of hearing .
Meetings
The meetings of the Approving Panel shall take place at such place as the Approving Panel may decide .
Decision-Making
Majority Decision
If the members differ in opinion on any point, such point shall be decided according to the opinion of the majority of the members .
Timelines
The Approving Panel must issue its decision within six months from the end of the month in which the reference was received .
Exclusions
In computing the period, the following shall be excluded:
- Period commencing from when the Approving Panel first directs the Commissioner for inquiries and ending when information is last received or one year, whichever is less
- Period commencing on stay by court order and ending when the stay is vacated
Remuneration Rules
Sitting Fee
For attending a meeting, the Chairperson and other members are entitled to a sitting fee of ₹6,000 per day .
Travelling Allowances
Members are entitled to travelling allowances including transportation charges for local travel and daily allowances (including accommodation) as admissible to an officer of the rank of Special Secretary to the Government of India .
Budgetary Provisions
The expenditure of an Approving Panel shall be met from the budgetary grants of the Department of Revenue .
Time Limits
Commissioner's Actions
- Directions under Section 274(3): within one month from the end of the month in which compliance falls
- Reference to Approving Panel: within two months from the end of the month in which final submission is received
- Directions to Assessing Officer: within one month where reference received, or two months where final submission received
Panel's Actions
- Circulation of reference: within seven days of receipt
- Decision: within six months from the end of the month in which reference was received
Expert Legal Guidance
Understanding the Approving Panel procedure is essential for taxpayers facing GAAR scrutiny. Anuj Desai & Associates provides expert advisory services on GAAR compliance, helping taxpayers navigate the Approving Panel process and protect their interests.