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.