CBDT signs 11 new unilateral APAs; Total 31 so far

The Finance Ministry today said 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 Finance Ministry said in a statement.
Out of the 11 new APAs, while seven have rollback provisions contained in them, the other four are for future five years, it said.
The CBDT aims to finalise 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.

Transfer pricing - transaction prices between separate entities of a large company - has generated much heat in connection with investments by large MNCs like Vodafone, Shell, WNS and Nokia.
MNCs are often accused of misusing the system to transfer profits to their subsidiaries in countries that have low tax rates.
Sources said that in case any of the companies decides to

avail the tax settlement scheme, it needs to provide a proof of withdrawal of "any proceeding for arbitration, conciliation or mediation or any notice thereof under any law for the time being in force or under any agreement entered into by India with any other country or territory outside India whether for protection of investment or otherwise".
The company will also have to furnish an undertaking waiving its right to seek or pursue any remedy or any claim in relation to the specified tax which may otherwise be available to it under any law or under an agreement with any country.

A firm availing of the offer would have to pay the principal tax amount within 30 days of the designated authority determining the amount payable by the declarant.
Also any amount paid in pursuance of a declaration shall not be refundable under any circumstances.
Announcing the one-time scheme of Dispute Resolution for companies which are facing tax demand for retrospective amendment to I-T Act, Jaitley had in his Budget speech said: "They can settle the case by paying only the tax arrears, in which case liability of the interest and penalty shall be waived."
Sources said the government was of the view that the arbitrations are not just time consuming but were also costing the government a lot besides getting India a bad name. The settlement scheme was proposed to put an end to all of that.