CBDT signs seven unilateral APAs in October 2017
The Central Board of Direct Taxes (CBDT), the policy-making body of income-tax department has signed seven unilateral advance pricing agreements (APAs) in October 2017.
With this, total number of APAs entered into by CBDT now stands at 184. This includes 171 unilateral and 12 bilateral APAs. In current financial year, total of 32 APAs (2 bilateral and 30 unilateral) were signed till date.
The APAs signed in October 2017 belonged to various sectors including FMCG, information technology, semi-conductor, travel and leisure, office furniture and engineering. The international transactions covered in these APAs include provision of IT-enabled services (ITES), software development services, marketing support services, engineering design services, payment of interest, trading and import of components, etc.
Advance Pricing Agreement (APA)
The APA Scheme was introduced by Government in 2012 to give tax certainty to MNCs that agree on certain principles in valuation of their cross-border transactions. They also provide assessees with alternate dispute resolution mechanism with respect to transfer pricing. It also helps in determining arm’s length price of international transactions in advance for maximum period of five future years. The rollback provision to pull out of it was introduced in 2014. The progress of APA scheme strengthens the government’s resolve of fostering a non-adversarial tax regime.