Central Board of Direct Taxes (CBDT) signed seven Unilateral Advance Pricing Agreements (APAs) with Indian taxpayers
The Central Board of Direct Taxes (CBDT) has entered into seven Unilateral Advance
Pricing Agreements (APAs) with Indian taxpayers. Some of
these agreements also have a “Rollback” provision in them.
- The APAs signed pertain to various sectors of the economy like banking, Information Technology and Automotives. The international transactions covered in these agreements include software development Services, IT enabled Services (BPOs), Engineering Design Services and Administrative & Business Support Services.
- With these signings, the total number of APAs entered into by the CBDT has reached 77. This includes 3 bilateral APAs and 74 Unilateral APAs. In the current financial year, a total of 13 Unilateral APAs have been entered into so far.
The APA Scheme was introduced in the Income-tax Act in 2012 and
the “Rollback” provisions were introduced in 2014.
- The scheme endeavours to provide certainty to taxpayers in the domain of transfer pricing by specifying the methods of pricing and setting the prices of international transactions in advance.
- Since its inception, the APA scheme has attracted tremendous interest and that has resulted in more than 700 applications having been filed in just four years.
An APA, usually for multiple years, is signed between a taxpayer
and the tax authority (CBDT) on an appropriate transfer pricing methodology for
determining the price and ensuing taxes on intra-group overseas transactions.
