CBDT inks 7 Advance Pricing Agreements to cut tax litigation

The Central Board of Direct Taxes (CBDT) on 18 July 2016 signed seven Unilateral Advance Pricing Agreements (APAs) with Indian taxpayers. Some of the agreements also have a Rollback provision as well.

The 7 APAs pertain to various sectors of economy like banking, Information Technology and Automotives. The international transactions covered in these agreements include software development Services, IT enabled Services, Engineering Design Services & Business Support Services. 
•    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 attracted tremendous interest and that has resulted in more than 700 applications (both unilateral and bilateral) having been filed in just four years.