Advance Pricing Agreements (APAs) with Indian TAX payers

The Central Board of Direct Taxes (CBDT) has entered into five unilateral Advance Pricing Agreements (APAs) with Indian taxpayers. One of these Agreements has a rollback provision in it.

• The five APAs signed pertain to diverse sectors i.e. Information Technology, Sourcing services and Investment advisory services.


• With these signings, the total number of APAs entered into by the CBDT has reached 103. These include 4 bilateral APAs and 99 unilateral APAs.

Background:

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 determining the arm’s length price of international transactions in advance for a maximum period of five future years. The taxpayer has also the option to rollback the APA for four preceding years.
• Since its inception, the APA scheme has attracted tremendous interest among Multi National Enterprises (MNEs) and more than 700 applications (both unilateral and bilateral) have been filed in just four years.