The Central Board of Direct Taxes (CBDT) has entered into 9 Advance Pricing Agreements (APAs). All the 9 Agreements entered into are Unilateral APAs. With this, the total number of APAs entered into by the CBDT has reached 152. This includes 11 Bilateral APAs and 141 Unilateral APAs.
In Financial Year 2016-17, a total of 88 APAs (8 Bilateral APAs and 80 Unilateral APAs) were entered into. The APAs signed in financial year 2016-17 include Agreements with some technological behemoths having major operations in India in the IT sector.
The 9 APAs entered into during the last two days of the current Financial Year pertain to various sectors of the economy like Information Technology, Aviation, Oil & Gas, Automobiles, Electricals & Electronics, etc. The international transactions covered in these agreements include Receipt of Intra-Group Services, Provision of IT Enabled Services, Provision of Software Development Services, Provision of Engineering Design Services, Provision of Marketing Support Services, Import of Traded Goods, Payment of Interest on ECB, Receipt of Interest, Receipt of Guarantee Fee, Receipt of License Fee, Export of Goods, Receipt of Technical Support Services, Provision of Business Support Services, 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 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.