Government of India

Ministry of Finance

Department of Revenue

Central Board of Direct Taxes

New Delhi, 23rd November, 2016.

PRESS RELEASE

The Central Board of Direct Taxes (CBDT) has entered into four more unilateral Advance Pricing Agreements (APAs) on 22nd and 23rd 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 nonadversarial 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.

(Meenakshi J. Goswami)  

Commissioner of Income Tax  

(Media and Technical Policy)  

Official Spokesperson, CBDT.

Advance Pricing Agreements provide transfer pricing certainty as CBDT signs additional unilateral APAs including rollback provisions. The Central Board of Direct Taxes executed additional unilateral Advance Pricing Agreements, some with Rollback provisions, covering international transactions in sectors such as pharmaceuticals, IT and construction and specifying pricing methods in advance for services including software development, IT-enabled services, engineering design, contract R&D and marketing support. The APA Scheme, introduced in 2012 with rollback added in 2014, aims to furnish transfer pricing certainty and has attracted substantial interest with over seven hundred applications, supporting a shift toward a nonadversarial tax regime.