The Central Board of Direct Taxes (CBDT) has started the year 2017 by entering into three unilateral Advance Pricing Agreements (APAs).

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.       

Advance Pricing Agreements provide transfer pricing certainty as the tax authority expands the APA programme with new agreements. The CBDT has executed three additional Advance Pricing Agreements, all unilateral, covering intra-group and support services in the Engineering Goods and Shipping sectors, bringing the total to 120 APAs (7 bilateral, 113 unilateral). The APA Scheme, introduced in 2012 with Rollback provisions in 2014, aims to provide transfer pricing certainty by specifying pricing methods and setting prices for international transactions in advance; the scheme has attracted over 700 applications and is described as fostering a non-adversarial tax regime.