The APA scheme endeavors 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.

New Delhi: The Central Board of Direct Taxes (CBDT) has entered into 4 more Advance Pricing Agreements (APAs), pertaining to sectors like telecom, banking, manufacturing, and education, during August an official statement said on Monday.

“Out of these four agreements, three are unilateral and one is bilateral. The bilateral APA is for international transactions between an Indian company and a UK-based company. This is the 8th bilateral APA with the United Kingdom and 13th overall. The other five bilateral APAs are with Japan,” in a statement from the Finance Ministry.

The APA scheme endeavors 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.

With the signing of these four agreements, the total number of APAs entered into by the CBDT has reached 175. This includes 162 unilateral APAs and 13 bilateral APAs. In the current financial year, a total of 23 APAs (two bilateral and 21 unilateral) have been signed till date.

“The international transactions covered by these four agreements include payment of royalty, provision of IT-enabled services, provision of software development services, provision of manpower services, import of raw materials, export of finished goods and provision of engineering design services,” said the statement.

The APA provisions were introduced in the Income Tax Act in 2012 and the `rollback` provisions were introduced in 2014. Since its inception, the APA scheme has been well-accepted by taxpayers and that has resulted in more than 800 applications (both unilateral and bilateral) being filed so far in five years.

“The progress of the APA scheme strengthens the government`s resolve of fostering a non-adversarial tax regime. The Indian APA program has been appreciated nationally and internationally for being able to address complex transfer pricing issues in a fair and transparent manner,” the statement added.

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