The Central Board of
Direct Taxes (CBDT),Department of Revenue, Ministry of Finance has
entered into four more unilateral Advance Pricing Agreements (APAs)
The four APAs signed pertain to the Manufacturing, Financial and
Information Technology sectors of the economy. The international
transactions covered in these agreements include Contract Manufacturing,
IT Enabled Services and Software Development Services.
With this, the total number of APAs entered into by the CBDT has reached
130. This includes 8 bilateral APAs and 122 Unilateral APAs. In the
current financial year, a total of 66 APAs (5 bilateral APAs and 61
unilateral APAs) have already been entered into. The CBDT expects more
APAs to be concluded and signed before the end of the current fiscal.
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 prices of
international transactions in advance. Since its inception, the APA
scheme has evinced a lot of interest from taxpayers and that has
resulted in more than 700 applications (both unilateral and bilateral)
being filed so far in about five years.
The progress of the APA Scheme strengthens the Government’s resolve of
fostering a non-adversarial tax regime. The Indian APA program has been
appreciated nationally and internationally for being able to address
complex transfer pricing issues in a fair and transparent manner.