CBDT Inks 7 Advance Pricing Agreements to Cut Tax Lawsuit [ Current Affairs ]


Central Board of Direct Taxes (CBDT) has signed seven one-sided Advance Pricing Agreements (APAs) with Indian taxpayers to reduce tax lawsuit. Number of APAs entered into by CBDT. So, CBDT has reached 77 APAs.

Image shows the Tax lawsuit

Image shows the Tax lawsuit

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  • This includes:

    • 3 bilateral APAs
    • 74 unilateral APAs.
  • Latest 7 APAs signed with taxpayers related to various sectors like:

    • Banking
    • Information technology
    • Automotive
  • The international transactions covered in these agreements include:

    • Software development Services
    • IT enabled Services
    • Engineering
  • Some of these APAs have rollback provisions and these provisions are introduced in 2014.

About Advance Pricing Agreements (APAs):

  • APA Scheme was introduced in the Income-tax Act in 2012. As per the provisions of the Income Tax Act, 1961.
  • APA generally signed between a taxpayer and the central tax authority (in case of India it is CBDT).
  • APAs provide an appropriating transfer pricing methodology for defining the value of assets and taxes on intra-group external transactions.
  • Reducing obedience costs and makes tax rule investment friendly for that it seeks to introduce certainty in tax law.
  • Scheme efforts to provide certainty to taxpayers to setting the prices of international transactions in advance.
  • That aims to avoid conflict between taxpayer and tax regulator.
  • In case of Indian perspective, APAs seeks to give:
Image about importance of APAs

Image about importance of APAs

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Transfer pricing:

  • It is referred to the setting of the price for goods and services sold between related legal subsidiaries within an enterprise.
  • Legal subsidiaries considered under the control of a single corporation include branches and companies that are fully or majority owned finally by the parent corporation.

- Published on: July 20, 2016