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Central Board of Direct Taxes (CBDT) has entered into four more unilateral
Advance Pricing Agreements (APAs) on 22 nd and 23 rd November, 2016. Some of
these agreements also have a “Rollback” provision in them.
With
these four signings, the total number of APAs entered into by the CBDT has
reached 115. This includes 7 bilateral APAs and 108 Unilateral APAs till date.
During the current financial year, a total of 51 APAs (4 bilateral APAs and 47
unilateral APAs) have been entered into so far.
The
four APAs signed over the last two days pertain to various sectors of the
economy like pharmaceuticals, Information Technology and construction. The
international transactions covered in these agreements include software
development Services, IT enabled Services (BPOs), Engineering Design Services,
Contract R&D Services and Marketing Support Services.
The
APA Scheme was introduced in the Income-tax Act in 2012 and the “Rollback”
provisions were introduced in 2014. 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 evinced a lot of interest from taxpayers and
that has resulted in more than 700 applications (both unilateral and bilateral)
being filed in just four years.
The
progress of the APA Scheme strengthens the Government's mission of fostering a
non-adversarial tax regime. The approach and functioning of the officers in the
APA teams have been appreciated and acknowledged by the industry in India and
abroad. The CBDT expects more APAs to be concluded and signed in the near
future.
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