Advance Pricing Agreements Current Affairs

CBDT signs 4 more Advance Pricing Agreements

The Central Board of Direct Taxes (CBDT) has entered into four more Advance Pricing Agreements (APAs), pertaining to sectors like telecom, banking, manufacturing and education in August 2017.

Out of these four agreements, three were unilateral and one was bilateral. The bilateral APA was for international transactions between an Indian company and UK-based company. With this, total number of APAs entered into by CBDT has reached 175. This includes 162 unilateral APAs and 13 bilateral APAs

Advance Pricing Agreements (APA)

The APA scheme of CBDT aims to provide certainty to taxpayers in domain of transfer pricing by specifying methods of pricing and setting prices of international transactions in advance. The APA provisions were introduced in Income Tax Act in 2012 and `rollback` provision to pull out was introduced in 2014.

The APA scheme’s objective is to strengthen government`s resolve of fostering non-adversarial tax regime. Moreover, Indian APA programme has been appreciated nationally and internationally for being able to address complex transfer pricing issues in fair and transparent manner.

It endeavours to provide certainty to taxpayers in domain of transfer pricing by specifying methods of pricing and setting prices of international transactions in advance. Under BAPA, certainty in tax treatment is provided for next 5 years while rollback provides dispute redressal for maximum of four past years preceding APA years.

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CBDT inks 9 Advance Pricing Agreements

The Central Board of Direct Taxes (CBDT) has entered into 9 Unilateral Advance Pricing Agreements (UAPAs) with Indian taxpayers in July, 2017. With this, total number of APAs signed till date stands at 171 (Bilateral-12 and Unilateral-159).

The nine APAs signed pertain to diverse sectors of the economy including Oil & Gas exploration, education, banking, pharmaceutical, manufacturing and IT. They also cover international transactions and provision of software development services, ITES , engineering design services, distribution, contract manufacturing, etc.

About Advance Pricing Agreements (APA)

The APA Scheme was introduced in the Income-tax (IT) Act. It 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. It aims to strengthen the Government’s commitment to foster a non-adversarial tax regime. Further, the taxpayer has the option to roll back the APA. The roll back provisions under the scheme were introduced in 2014. APA provides total of nine years of tax certainty including four year term of rollback.

About Central Board of Direct Taxes (CBDT)

CBDT is nodal policy-making body of the Income Tax (IT) department under the Union Finance Ministry. It is a statutory authority established under The Central Board of Revenue Act, 1963. It is supreme body in India for framing policies related to direct taxes. The composition of CBDT includes Chairman and six members.

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