31-Mar-2022: Signing of 62 Advance Pricing Agreements by CBDT in FY 2021-22

The Central Board of Direct Taxes (CBDT) has entered into 62 Advance Pricing Agreements (APA) in FY 2021-22 with Indian taxpayers. This includes 13 Bilateral APAs (consequent to Mutual Agreement between India and its treaty partners) and 49 Unilateral APAs. With this, the total number of APAs since inception of the APA program has gone up to 421.

Despite severe economic and social disruption caused by the CoVID-19 pandemic in first part of the financial year, the number of APAs signed compares very well with the APAs signed in the preceding two years (31 APAs in FY 2020-21 and 57 APAs in FY 2019-20).

The APA Scheme endeavours to provide certainty to taxpayers in the domain of transfer pricing by specifying the methods of pricing and determining the arm’s length price of international transactions in advance for the maximum of five future years. Further, the taxpayer has the option to roll back the APA for four preceding years, as a result of which, total nine years of tax certainty is provided.

The progress of the APA scheme strengthens the Government’s resolve of fostering a non-adversarial tax regime and increasing the ease of doing business in India. CBDT appreciates the cooperative and transparent attitude of taxpayers in this regard.

1-Oct-2019: CBDT inks the 300th Advance Pricing Agreement

The Central Board of Direct Taxes (CBDT) has signed the 300th Advance Pricing Agreement (APA) during the month of September, 2019. This is a significant landmark of India’s APA Programme, which is currently in its seventh year.

Three APAs were entered into in September, 2019 (2 Unilateral and 1 Bilateral APA), which has taken the total number of APAs signed by CBDT to 300. During the ongoing fiscal, the total number of APAs entered into has gone up to 29 (27 Unilateral and 2 Bilateral APAs). The Bilateral APA signed in September, 2019 pertains to United Kingdom.

The APAs entered into during September, 2019 pertain to various sectors of the economy like retail, garments, and consumer foods. The international transactions covered in these agreements, inter alia, include provision of software development services, contract manufacturing, provision of IT enabled Services and provision of Support Services.

The APA Scheme continues to make good progress in providing tax certainty to MNEs. It reflects the Government’s commitment towards fostering a non-adversarial tax regime.

4-Sep-2019: CBDT enters into 26 APAs during the current Financial Year (2019-20)

The Central Board of Direct Taxes (CBDT) has entered into 26 Advance Pricing Agreements (APAs) in the first 5 months of the current financial year (April to August, 2019). With the signing of these APAs, the total number of APAs entered into by the CBDT as of now stand at 297, which includes 32 Bilateral Advance Pricing Agreements (BAPAs).

Out of these 26 APAs, 1 is a BAPA entered into with the United Kingdom and the remaining 25 are Unilateral Advance Pricing Agreements (UAPAs).

The BAPAs and UAPAs entered into during this period pertain to various sectors and sub-sectors of the economy like Information Technology, Banking, Semiconductor, Power, Pharmaceutical, Hydrocarbon, Publishing, Automobile, etc.

The international transactions covered in all these agreements, inter alia, include the following:

• contract manufacturing
• provision of software development services
• back office engineering support service
• provision of back office (ITeS) support services
• provision of marketing support services
• payment of royalty for use of technology and brand
• trading and distribution
• payment of charter charges
• corporate guarantee
• intra-group services
• interest on financial instruments.

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.

3-Apr-2019: Indian Advance Pricing Agreement regime moves forward with signing of 18 APAs by CBDT in March, 2019

The Central Board of Direct Taxes (CBDT) has entered into 18 APAs in the month of March 2019, which includes 03 Bilateral APAs (BAPAs). With the signing of these APAs, the total number of APAs entered into by the CBDT in the year 2018-19 stands at 52, which includes 11 BAPAs. The total number of APAs entered into by the CBDT as of now stands at 271, which inter alia includes 31 BAPAs.

The BAPAs entered into during the month of March 2019 were with the following treaty partners:-

• Australia – 1
• Netherlands - 1
• USA – 1

The BAPAs and Unilateral APAs (UAPAs) entered into during the month of March 2019 pertain to various sectors and sub-sectors of the economy like anti-friction bearings, risk management solutions platforms, BPO, IT/ITeS, ATMs, industrial and institutional cleaning and hygiene products, etc.

The International Transactions covered in all these Agreements, inter alia, include the following, -

• contract manufacturing
• provision of software development services
• back office engineering support service
• provision of back office (ITeS) support services
• provision of marketing support services
• payment of royalty for use of technology and brand trading
• payment of interest.

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.

4-Sep-2017: Indian Advance Pricing Agreement regime moves forward with signing of four Advance Pricing Agreements (APAs)

The Central Board of Direct Taxes (CBDT) has entered into 4 more Advance Pricing Agreements (APAs) during August, 2017. Out of these 4 Agreements, 3 are Unilateral and 1 is a Bilateral. The Bilateral APA is for international transactions between an Indian company and a UK-based company. This is the 8th Bilateral APA with the United Kingdom and 13th overall (the other 5 being with Japan).

With the signing of these 4 Agreements, the total number of APAs entered into by CBDT has reached 175. This includes 162 Unilateral APAs and 13 Bilateral APAs. In the current financial year, a total of 23 APAs (2 Bilateral and 21 Unilateral) have been signed till date.

The 4 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, Provision of Software Development Services, Provision of Manpower Services, Import of Raw Materials, Export of Finished Goods, Provision of Engineering Design Services, etc.

The APA provisions were introduced in the Income-tax Act in 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.

28-Feb-2017: Central Board of Direct Taxes (CBDT) signs ten (10) more Advance Pricing Agreements (APAs)

The Central Board of Direct Taxes (CBDT) has entered into 10 more Advance Pricing Agreements (APAs) over the last one week, including 7 Unilateral APAs signed today. Two of these ten agreements are Bilateral APAs with the United Kingdom and Japan. Seven of these Agreements have Rollback provisions in them.

With this, the total number of APAs entered into by the CBDT has reached 140. This includes 10 Bilateral APAs and 130 Unilateral APAs. In the current financial year, a total of 76 APAs (7 Bilateral APAs and 61 Unilateral APAs) have already been entered into. The CBDT expects more APAs to be concluded and signed before the end of the current fiscal.

The APAs entered into over the last week pertain to various sectors of the economy like Telecom, Pharmaceutical, Banking & Finance, Steel, Retail, Information Technology, etc. The international transactions covered in these agreements include Payment of Royalty Fee, Trading in Goods, IT Enabled Services, Software Development Services, Marketing Support Services, Clinical Research Services, Non-binding Investment Advisory Services, Payment of Interest on ECB, etc.

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 so far in about 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.

13-Jan-2017: Signing of Bilateral Advance Pricing Agreement by CBDT

The Central Board of Direct Taxes (CBDT) entered into a Bilateral Advance Pricing Agreement (BAPA) on the 13th of January, 2017 with Indian subsidiary of a Japanese trading company. Recently, the CBDT has also modified an existing Bilateral APA with another Indian subsidiary of a Japanese company to include rollback provisions. Thus, total three Bilateral APAs are now signed with Indian subsidiaries of Japanese companies all including rollbacks. The total number of bilateral APAs entered into by the CBDT is now eight.

The APA Scheme was introduced in the Income-tax Act in 2012 and the “Rollback” provisions were introduced in 2014. Signing of bilateral APA is an important step towards ascertaining certainty in transfer pricing matters of multinational company cases and dispute resolution. Under BAPA, certainty in tax treatment is provided for the next 5 years while rollback provides dispute redressal for a maximum of four past years preceding APA years. A BAPA may be preferred by multinational companies since finalisation of the same involves reaching an understanding between the tax administrations of the two countries and for the transfer pricing adjustment done in the hands of the Indian entity, corresponding adjustment is available in the hands of related foreign entity, thereby relieving economic double taxation. The progress of the APA Scheme strengthens the Government’s mission of fostering a non-adversarial tax regime.  The CBDT expects more BAPAs to be concluded and signed in the near future.

4-Jan-2017: Central Board of Direct Taxes signs three more Advance Pricing Agreements pertaining to the Engineering Goods and Shipping sectors.

The Central Board of Direct Taxes (CBDT) has started the year 2017 by entering into three unilateral Advance Pricing Agreements (APAs). With this, the total number of APAs entered into by the CBDT reaches 120.

The three APAs signed today pertain to the Engineering Goods and Shipping sectors of the economy. The international transactions covered in these agreements include Intra-group Services and Support Services.

With this, the total number of APAs entered into by the CBDT has reached 120 which includes 7 bilateral APAs and 113 Unilateral APAs. A total of 56 APAs (4 bilateral APAs and 52 unilateral APAs) have been entered into in the current financial year till date. The CBDT expects more APAs to be concluded and signed in the near future.

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 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. The approach and functioning of the officers in the APA teams have been appreciated and acknowledged by the industry in India and abroad.