THE Central
Board of Direct Taxes (CBDT) has recently entered into 11 more Advance
Pricing Agreements (APAs) with Indian subsidiaries for foreign
companies. In a major push towards providing certainty to foreign
investors in the arena of transfer pricing, the CBDT signed these APAs
operating in various segments of the economy like investment advisory
services, engineering design services, marine products, contract
R&D, software development services, IT enabled services, cargo
handling support services etc.
While seven of these APAs have rollback provisions contained in
them, the other four are Agreements for the future five years only.
APAs with rollback provisions can cover a maximum period of nine years
in total. With this, the CBDT has so far entered into 31 APAs (30)
unilateral and one bilateral).
It may be recalled that the APA programme was introduced in 2012
vide the Finance Act, 2012. In the first three years of the programme, a
total of about 580 applications have been received from taxpayers.
While CBDT concluded five APAs within the first year, a further four
APAs got signed in the second year. This year has already witnessed a
dramatic increase with the conclusion of 22 APAs and it is expected that
further 30 to 40 Agreements could be finalized before the end of the
fiscal. Analysts and experts feel this new momentum will go a long way
in avoiding disputes.
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