The Central Board of Direct Taxes (CBDT) entered into seven more Advance Pricing Agreements (APAs) during the month of February, 2018. All the seven are Unilateral APAs. With the signing of these Agreements, CBDT has crossed an important milestone of having signed 200 APAs.

The total number of APAs entered into by the CBDT till date has gone up to 203. This includes 185 Unilateral APAs and 18 Bilateral APAs. In the current financial year, the CBDT has entered into 51 APAs so far (44 Unilateral APAs and 7 Bilateral APAs).

The seven APAs signed in February pertain to the Pharmaceuticals, Automobiles, Financial and Food & Beverages sectors of the economy. The international transactions covered in these agreements include Manufacturing, Provision of Software Development Services, Provision of IT enabled Services, Payment of Royalty, Provision of Contract R&D Services, Provision of Marketing Support Services, Distribution, AMP Expenses, Provision of Engineering Design Support Services, Provision of Sourcing Support Services, Payment of Interest, etc.

The APA provisions were introduced in the Income-tax Act, 1961 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.

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. It has contributed significantly towards improving the ease of doing business in India.

Advance Pricing Agreements: CBDT reaches milestone, expanding transfer pricing certainty and non adversarial compliance for taxpayers nationwide. The CBDT signed seven additional APAs, all Unilateral, raising the total to 203 APAs (185 Unilateral and 18 Bilateral). The recent agreements span Pharmaceuticals, Automobiles, Financial and Food & Beverages sectors and cover international transactions including manufacturing, software and IT services, royalties, contract R&D, marketing support, distribution, AMP expenses, engineering design and sourcing support, and interest. The APA scheme, introduced in the Income tax Act in 2012 with rollback provisions added in 2014, is intended to provide transfer pricing certainty by specifying pricing methods in advance and to promote a non adversarial tax regime.