Rule 107 of the Income-tax Rules, 2026

Where this rule sits

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What this rule does

Sub-rule (1) permits the applicant to withdraw the application for agreement at any time before the finalisation of the terms of the agreement, by furnishing an intimation. The intimation goes to the Principal Chief Commissioner of Income-tax (International Taxation) in the case of a unilateral agreement, and to the competent authority of India in the case of a bilateral or multilateral agreement.

Sub-rule (2) provides that the fee paid shall not be refunded on withdrawal of the application by the applicant.

Why it is there

An application for an advance pricing agreement runs for a long time and an applicant may want out of it. The rule settles the two questions that arise: how late withdrawal is possible, and what happens to the money already paid. It fixes the cut-off at the finalisation of the terms of the agreement rather than at signature, and it routes the intimation differently depending on whether the agreement is unilateral or involves another country.

Who it applies to

• An applicant who has made an application for a unilateral agreement
• An applicant who has made an application for a bilateral or multilateral agreement
• The Principal Chief Commissioner of Income-tax (International Taxation), for unilateral agreements
• The competent authority of India, for bilateral or multilateral agreements

What this means in practice

Withdrawal is by intimation and needs no permission, but it is only available before the terms of the agreement are finalised — not before the agreement is signed, which is a later point. The addressee is not interchangeable: an intimation sent to the Principal Chief Commissioner of Income-tax (International Taxation) in a bilateral case does not answer sub-rule (1), which requires the competent authority of India. The fee is sunk once paid; sub-rule (2) makes no exception for withdrawal at an early stage or for reasons outside the applicant's control, so a fresh application would carry a fresh fee.

An example

A company applies for a bilateral advance pricing agreement and, after two rounds of discussion but before the terms are finalised, decides the transactions it wanted covered have ceased. It withdraws by furnishing an intimation to the competent authority of India. The fee it paid with the application is not refunded, and if it later wants an agreement for other transactions it starts again.

Where you meet this rule

A reader meets it in the intimation of withdrawal itself, filed in the course of an advance pricing agreement proceeding, and in the decision whether to withdraw or to let the process run to finalisation.

The words themselves

What people get wrong

• Assuming withdrawal is possible until the agreement is signed. Sub-rule (1) allows it only before the finalisation of the terms of the agreement.
• Sending the intimation to the wrong authority. Sub-rule (1) names the Principal Chief Commissioner of Income-tax (International Taxation) for a unilateral agreement and the competent authority of India for a bilateral or multilateral agreement.
• Expecting a refund or an adjustment of the fee. Sub-rule (2) rules it out on withdrawal by the applicant.
• Treating withdrawal as needing an order of approval. The rule requires the applicant to furnish an intimation.