CBDT resolves Rs 5,000-cr tax disputes under MAP

The tax department on Tuesday said it has resolved disputes, totalling Rs 5,000 crore, with foreign companies in sectors like software and consultancy under the mutual agreement procedure (MAP) in about two years time.

The countries with which the cases have been resolved are the US, Japan, the UK and China, the Central Board of Direct Taxes (CBDT) in a statement said.

"Since April 1, 2014 till date, the CBDT has resolved 180 cases under MAP. The total amount of income locked up in dispute in these cases is approximately Rs 5,000 crore," it said.

MAP, under the double taxation avoidance agreement (DTAA), is an alternative tax dispute resolution mechanism available to authorities and foreign investors.

"Its use to resolve disputes has provided comfort to foreign investors and also reduced the number of cases under litigation. This is one of the actions taken by CBDT to ensure a fair and judicious dispute resolution regime to encourage foreign investment," the statement added.

The resolved cases pertain to sectors like software, information technology-enabled, manufacturing and consultancy services, among others, it said.

Tax treaties signed by India with various countries contain an article to relieve taxpayers from double taxation through an MAP. Internationally, the MAP is an important mechanism to resolve tax disputes between countries.

The CBDT said the MAP programme is led by one or more competent authorities designated by the signatory countries to resolve tax disputes under the provisions of each treaty.

"In the last two years, increased focus on MAP has resulted in resolution of large number of disputes relating to double taxation," the CBDT said.