The Finance Ministry has said that it has so far entered into 31 Advance Pricing Agreements with Indian subsidiaries of foreign companies operating in various segments.
The Central Board of Direct Taxes (CBDT) has entered into 11 more unilateral Advance Pricing Agreements (APAs). With this, CBDT has so far signed 31 APAs (30 unilateral and one bilateral).
The CBDT aims to finalize another 30 to 40 APAs before the end of this fiscal to provide stability and confidence to foreign enterprises operating in India.
The APA programme was introduced in the Income-tax Act, 1961 in 2012. An APA, usually for multiple years, is signed between a taxpayer and the tax authority (CBDT) on an appropriate transfer pricing methodology for determining the price and ensuing taxes on intra-group overseas transactions.
The law requires that goods and services be sold to subsidiaries by parent companies at arm's length price, at which goods are traded between unconnected companies.