In a move aimed at providing greater stability and transparency in its tax policy, India is set to finalise about 40 Advance Pricing Agreements by the end of the fiscal.
“As many as 22 such agreements have already concluded in the current fiscal while 30 to 40 APAs expected to be finalised before the end of the fiscal. The new momentum will go a long way in avoiding disputes,” said an official release on Friday.
The Central Board of Direct Taxes has already signed 11 more advance pricing agreements with Indian subsidiaries of foreign companies this fiscal, taking the total number of such pacts signed by the tax department to 31.
“The Central Board of Direct Taxes signed these agreements operating in various segments of the economy like investment advisory services, engineering design services, marine products, contract R&D, software development services, IT enabled services and cargo handling support services,” said an official release on Friday.
While seven of these agreements contain rollback provisions that cover a period of nine years, the other four would be prospectively for a period of five years.
The Finance Ministry had introduced APAs, which allow for prospective agreements between the tax payer and the tax authority over the transfer prices was introduced in 2012 through the Finance Act, 2012. In the first three years of the programme, a total of about 580 applications have been received from taxpayers. While CBDT concluded five APAs within the first year and another four pacts were signed in the next year.