CBDT signs four Advance Pricing Agreements, registers 175 agreements

The Central Board of Direct Taxes (CBDT) entered into four more Advance Pricing Agreements (APAs) during August, 2017, thus registering a total of 175 agreements signed by the chamber, including 162 unilateral APAs and 13 bilateral APAs.

A total of 23 APAs, including two bilateral and 21 unilateral agreements have been signed till date. With the signing of these four agreements, the total number of APAs entered into by CBDT has reached 175.

Out of these four agreements, three are unilateral and one is a bilateral. The Bilateral APA is for international transactions between an Indian company and a UK-based company. This is the eighth bilateral APA with the United Kingdom and 13th overall, the other five being with Japan.

The four APAs entered into during August, 2017 pertain to various sectors of the economy like telecom, banking, manufacturing and education. The international transactions covered in these agreements include payment of royalty, provision of IT-enabled services, software development services, manpower services, import of raw materials, export of finished goods and provision of engineering design services.

The APA provisions were introduced in the Income-tax Act,2012 and the "rollback" provisions were introduced in 2014. The APA 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 been well-accepted by taxpayers and that has resulted in more than 800 applications (both Unilateral and Bilateral) being filed so far in five years.

The progress of the APA scheme strengthens the Government's resolve of fostering a non-adversarial tax regime. The Indian APA programme has been appreciated nationally and internationally for being able to address complex transfer pricing issues in a fair and transparent manner.