The Central Board of Direct Taxes (CBDT) has signed four more unilateral advance pricing agreements (APAs) with Indian taxpayers as it looks to reduce litigation by providing certainty in transfer pricing.
The four APAs signed over the last two days pertain to sectors like pharmaceuticals, information technology and construction. Some of these agreements also have a 'Rollback' provision in them, a finance ministry statement said.
The international transactions covered in these agreements include software development Services, IT enabled Services (BPOs), Engineering Design Services, Contract R&D Services and Marketing Support Services.
With these four signings, the total number of APAs entered into by the CBDT has reached 115. This includes 7 bilateral APAs and 108 Unilateral APAs till date.
During the current financial year, a total of 51 APAs (4 bilateral APAs and 47 unilateral APAs) have been entered into so far.
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 ministry added.
"The progress of the APA Scheme strengthens the Government's mission of fostering a non-adversarial tax regime. The CBDT expects more APAs to be concluded and signed in the near future," it said.
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