CBDT has signed the first batch of five unilateral Advance Pricing Agreements (APA) (235 KB) PDF FileOpens in a new window
April, 01st 2014
PRESS INFORMATION BUREAU
GOVERNMENT OF INDIA
CBDT SIGNS THE FIRST BATCH OF FIVE (5) UNILATERAL ADVANCE PRICING
AGREEMENTS (APA); AGREEMENTS COVER A PERIOD OF FIVE (5) YEARS
FROM AY 2014-15 TO AY 2018-19 AND SPECIFY THE ARM'S LENGTH PRICE FOR
THE COVERED INTERNATIONAL TRANSACTIONS ENTERED INTO BY THE
New Delhi, March 31, 2014
Chaitra 10, 1935
The Central Board of Direct Taxes (CBDT) has signed the first batch of five (5) unilateral
Advance Pricing Agreements (APA) here today. The agreements cover a period of five (5) years
from AY 2014-15 to AY 2018-19 and specify the arm's length price for the covered international
transactions entered into by the taxpayers. These agreements cover a range of international
transactions, including interest payments, corporate guarantees, non -binding investment
advisory services and contract manufacturing. The agreements pertain to different industrial
sectors including pharmaceuticals, telecom, exploration and financial services.
The agreements provide a complete certainty to the taxpayers for five (5) years with regard to
the covered international transactions. The APA programme came into effect on 1st July 2012
and the first batch of 146 APA applications was received in March 2013. The CBDT has been
able to conclude the first set of agreements within a period of one (1) year as against the
internationally accepted norm of at least 2 years.
The whole scheme of APA has been designed with the intention of creating a taxpayer friendly
environment in transfer pricing matters and to minimise the transfer pricing disputes. Before
filing the APA applications, taxpayers are given the opportunity to share their expectations from
the APA process during the pre-filing consultations and the APA team shares a broader
understanding of the forthcoming APA procedure.
Having received an APA application, the APA team works towards establishing the appropriate
economic analysis of the covered international transactions which also involves a site visit i.e.
physical verification of the business of the applicant with regard to the said transactions. It is
this detailed fact finding exercise which lends credibility to the determination of arm's length
price under the APA. The APA team furnishes a report incorporating functions, assets and risk
(FAR) analysis which is further examined at length by the CBDT before its submission for the
final approval of the Central Government.