sitemapHome | Registration | Job Portal for CA's | Expert Exchange | Currency Converter | Post Matrimonial Ads | Post Property Ads
News shortcuts: From the Courts | News Headlines | VAT (Value Added Tax) | Placements & Empanelment | Various Acts & Rules | Latest Circulars | New Forms | Forex | Auditing | Direct Tax | Customs and Excise | ICAI | Corporate Law | Markets | Students | General | Mergers and Acquisitions | Continuing Prof. Edu. | Budget Extravaganza | Transfer Pricing | GST - Goods and Services Tax
Latest Expert Exchange
« Transfer Pricing »
 Move court only on question of law in transfer pricing cases: High Court
 CBDT proposes clear-cut timelines under transfer pricing
 Taxman disallows AMP deductions sought by MNCs
 Transfer Pricing Dispute Resolutions in India: New Relaxations
  CBDT to accept transfer pricing MAP sans riders
 Indian Subsidiary Held To Be A Dependent Agent PE – Transfer Pricing Study Considered Inadequate
  New rules to cut transfer pricing disputes
 Transfer pricing review and adjustments in Germany
 Indian advance pricing agreement uses customs value as arm’s length price
 Indian advance pricing agreement uses customs value as arm’s length price
  How advance pricing agreement helps India-Singapore business ties

Rollback provision available in respect of bilateral advance pricing agreement under the India-Korea DTAA
April, 10th 2017

As a major boost to multinational companies located in Korea and doing business in India, the Central Board of Direct Taxes (CBDT) has clarified that the roll back provision would be available for applications under bilateral Advance Pricing Agreement (APA) under the India-Korea Double Taxation Avoidance Agreement (DTAA), involving international transactions with associated enterprises in Korea for the APA period beginning Financial Year (FY) 2017-18. This goes in line with the agenda of the government to make India an easier place to do business and inspire confidence in Korean companies for resolving transfer pricing disputes.

Background

A revised DTAA between India and Korea for the Avoidance of Double Taxation and Prevention of Fiscal Evasion with respect to taxes on income was signed on 18 May 2015 and came into force on 12 September 2016. Article 9(2) of the revised India-Korea DTAA provides recourse to the taxpayers of both countries to apply for Mutual Agreement Procedure in transfer pricing disputes as well as apply for Bilateral APAs for the APA period beginning FY 2017-18.

In light of the above, CBDT has received queries from taxpayers regarding availability of rollback provision in respect of bilateral APA applications for the period beginning FY 2017-18.

Requests for a rollback provision are to be processed in accordance with Section 92 CC (9A) of the Income Tax Act 1961 (IT Act), and the rules framed thereunder.

Khaitan Comment

The APA provisions were introduced in the IT Act in 2012 and the roll back provisions for dispute redressal were introduced in 2014. An APA permits taxpayers and tax authorities to mutually agree on the arm’s length price for a related party transaction with associated enterprises. Prior to the notification of the rollback provision, the APA provisions were applicable for 5 (five) prospective financial years from the date when the APA has been applied. Post the applicability of the roll back provision, an APA would be applicable for 5 (five) prospective years as well as immediately preceding 4 (four) years, thereby ensuring that there is certainty to the taxpayer for a maximum period of 9 (nine) years.

To illustrate, if an applicant had filed for an APA on 31 March 2017, it would become effective for five prospective years, starting 1 April 2017 that is FY 18, FY 19, FY 20, FY21 and FY22. However, after the availability of a roll back provision, in addition to these years, the taxpayer under the India- Korea DTAA can now also apply to cover four past years in the same APA application that is FY 14, FY15, FY16 and FY17.

A retrospective applicability of the APA would imply that such cases do not need to go through the domestic litigation system which can be a long drawn process. Overall, with the allowance of the roll back provision, the government has enabled Korean companies doing business in India to manage transfer pricing disputes in an effective manner.

Home | About Us | Terms and Conditions | Contact Us
Copyright 2018 CAinINDIA All Right Reserved.
Designed and Developed by Binarysoft Technologies Pvt. Ltd.
Portal Design Website Design Portal Designing Website Designing Web Design Professional Portal Design Professional Website Design Professional Web Design Portal Design India Website Design India Portal Designing India Website Designing India Web Design India Professional Portal Design India Professional Website Design India Chicago Professional Web Design New York Professional Web Design California Website Design Florida Website Design New Jersey Website Design Britain UK Website Design London Manchester Website Design

Transfer Pricing | International Taxation | Business Consulting | Corporate Compliance and Consulting | Assurance and Risk Advisory | Indirect Taxes | Direct Taxes | Transaction Advisory | Regular Compliance and Reporting | Tax Assessments | International Taxation Advisory | Capital Structuring | Withholding tax advisory | Expatriate Tax Reporting | Litigation | Badges | Club Badges | Seals | Military Insignias | Emblems | Family Crest | Software Development India | Software Development Company | SEO Company | Web Application Development | MLM Software | MLM Solutions