The Central Board of Direct Taxes (CBDT) has signed seven Unilateral Advance Pricing Agreements (APAs) with Indian taxpayers in a moving design to reduce tax litigation. With this, the total number of APAs entered into by the CBDT has reached 77. This includes 3 bilateral APAs and 74 unilateral APAs. The latest APAs signed with taxpayers pertain to various sectors like banking, information technology, and automotive. The international transactions covered in these agreements include software development Services, IT enabled Services, Engineering Design Services & Business Support Services. Some of the agreements also have a Rollback provision as well.
The APA Scheme was introduced in the Income-tax Act in 2012 while the Rollback provisions were introduced in 2014. APAs provide an appropriate transfer pricing methodology for determining the value of assets and taxes on intra-group overseas transactions. The scheme endeavours to provide certainty to taxpayers in the domain of transfer pricing by specifying the methods of pricing and setting the prices of international transactions in advance. Since its inception, the APA scheme has attracted tremendous interest and that has resulted in more than 700 applications (both unilateral and bilateral) having been filed in just four years. The progress of the APA Scheme strengthens the Government’s mission of fostering a non-adversarial tax regime.
So let’s discuss some questions related to this post:
1. Name the department which has signed 7 advance pricing agreements to cut tax litigation with Indian taxpayers?
2. Advance Pricing Agreements (APAs) scheme has introduced in which year and at present total how many APAs has entered into by the CBDT?
Courtesy: Business Standard