Sanjeev Sharma
Commissioner of Income Tax (APA), Delhi
sanjeev.sharma63@nic.in

Sanjeev Sharma

Mr. Sanjeev Sharma belongs to 1989 batch of IRS and is presently working as Commissioner (APA)-2, New Delhi. He has mainly worked in the areas of international taxation, transfer pricing, ITAT, TDS, and investigation. He has worked as an advisor in the OECD Secretariat in Paris for more than three years (2010 to 2013).

He completed the LL.M. program in International Tax Law from Vienna University of Economy and Business (WU), Austria in 2006. In the year 2009, he attended the “Managing Global Governance Programme” for a period of 6 months organized by the German Development Institute, Federal Ministry of Economic Cooperation and Development, Germany in the city of Bonn.

He is identified as an international tax expert by the UNDP/OECD for their program “Tax Inspectors without Borders”. He is also an identified tax expert for the programs of the IMF.

Executive Summary

A separate code on transfer pricing under sections 92 to 92F of the Income Tax Act, 1961 (hereafter, the ITA) covering intra-group cross-border transactions became applicable from 1 April 2001. The regulations are based on the arm’s length principle and provided for determination of arm’s length price of international transactions between associated enterprises. The Rules 10A to 10 E of the Income Tax Rules, 1962 (hereafter, the Rules) deals with procedural aspects regarding the implementation of transfer pricing law.

1. Introduction’

A separate code on transfer pricing under sections 92 to 92F of the Income Tax Act, 1961 (hereafter, the ITA) covering intra-group cross-border transactions became applicable from 1 April 2001. The regulations are based on the arm’s length principle and provided for determination of arm’s length price of international transactions between associated enterprises. The Rules 10A to 10 E of the Income Tax Rules, 1962 (hereafter, the Rules) deals with procedural aspects regarding the implementation of transfer pricing law.

Years of audits had resulted in a large number of transfer pricing disputes. The decisions by various administrative and judicial authorities were not helping proper resolution of these disputes which most of the times were of repetitive in nature and more of issues of facts than questions of law. A need for an alternate and effective dispute resolution mechanism was felt to bring about certainty and uniformity of approach on the transfer pricing issues.

In this background, the advance pricing agreement (APA) programme was introduced in the year 2012 in the ITA. The provisions regarding rollback of the APA were added later in the year 2015. The APA process is voluntary, and supplements appeal and other dispute resolution measures provided in the ITA and the Double Taxation Avoidance Agreements for resolving transfer pricing disputes.

Six years have elapsed since the APA programme was introduced in India. Commenting on the APA programme, the Chairman of the Central Board of Direct Taxes (CBDT) in the second APA Annual Report stated that, “The APA Programme is a major initiative of the Government towards fostering a non-adversarial tax regime. By concluding 219  Agreements till 31 March 2018, we have shown our intent and commitment towards establishing such a regime. Let me assure all stakeholders that every possible step would be taken to strengthen the APA Programme.”

Sections 2 and 3 describe the legal and administrative framework for the APA programme. APA process is summarised in Section 4. Section 5 provides information on applications filed and agreements signed. Conclusion is available in Section 6.

2. The APA Programme- Legal Framework

An APA is an agreement between the CBDT and any person, which determines, in advance, the arm’s length price (hereafter, ALP) or specifies the manner of the determination of ALP (or both), in relation to an international transaction.

The primary objective of an APA is to provide certainty and comfort to taxpayers so that predictable and foreseeable conditions and outcomes can be expected regarding transfer pricing practices. The benefits of an APA are many. The risk of double taxation is eliminated in the bilateral APA. The APA also provides for an agreement on maintenance of documentation, so that the burden of record keeping is reduced. Further, there is no full-scale transfer pricing audit and only a compliance audit to check the adherence to the agreed terms and conditions.

India has created a legal framework providing for a legally binding agreement between the taxpayer and the CBDT. The Finance Act, 2012, inserted sections 92CC and 92 CD in the ITA to provide the legal basis for APA in India. These statutory provisions, effective from 1 July 2012, empowered the CBDT to enter an agreement with any person, with the approval of Central Government, determining the ALP or specifying the manner of determination of ALP in relation to an international transaction to be entered into by that person.

The rules regarding the implementation aspects of the APA Scheme were notified later on 30 August 2012 in the form of rules 10F to 10T and rule 44GA of the Rules. These provisions lay down the detailed procedures for the filing of pre-filing consultation application, pre-filing consultation, fees, the filing of APA application, processing of the

application, amendment of application, withdrawal of application, terms and conditions, filing of Annual Compliance Report, Compliance Audit, revision, cancellation and renewal of the APA.

The CBDT issued a “Guidance with FAQs” on the APA scheme in the form of a Tax Payer Information Series2. A taxpayer can request an APA for a maximum period of five years. A shorter period is not prohibited.

Rollback provisions in the APA Scheme were introduced through the insertion of sub-section (9A) in section 92CC by the Finance (No.2) Act, 2014. The relevant rules (10MA and 10RA) for the rollback of the APA were notified on 14 March 2015, and a FAQ3 through Circular No. 10/2015 was issued explaining the provisions of the rollback of the APA. The primary condition for the rollback of the APA is that the international transaction in the rollback period shall be the same as in the APA period. The FAR analysis of the rollback year shall not differ materially from the FAR analysis validated for the APA years. The rollback provisions are applicable for four years prior to the first year of the APA period, and the applicant does not have the option to pick and choose the years for which it wants to apply for rollback. The applicant must apply the rollback of the APA for all four years or not apply at all. For example, if the applicant’s transfer price has been accepted to be at arm’s length in the transfer pricing audit for any of the four previous years or a year is not in the transfer pricing audit, these years cannot be left out, and rollback of the APA would apply to these years also.

A taxpayer would be able to have certainty in matters of transfer pricing for a maximum period of 9 years (prospective five years and four rollback years) by applying for an APA along with an application for the rollback of the APA.

Transfer pricing regulation4 has introduced provisions regarding secondary adjustment and these also apply to primary adjustment arising out of the APA.

The APA remains in force for the period covered in the APA and is binding on the requesting person and the Commissioner of Income Tax (and his subordinate income tax authorities) having jurisdiction over such person.

The APA program provides for unilateral, bilateral, and multilateral APAs. The applicant has the option of choosing a particular type of APA. A unilateral APA5 is an agreement between the CBDT and the applicant and protects the applicant from transfer pricing adjustments under the ITA. In the bilateral APA, the applicant is required to make an application with the Indian competent authority, and another request is needed to be made by the applicant or its AE to the competent authority of its country of residence. In multilateral APA, the applicant is required to make an application with the Indian competent authority, and simultaneously the applicant or its AEs should apply to the competent authority of the other countries relevant to the international transactions. The bilateral and multilateral APAs protect the taxpayers and their associated enterprises from the potential double taxation of the income from the same international transaction.

The provisions of mutual agreement procedure (Art.25 or equivalent) and associated enterprises (Art.9) of relevant tax treaty are used to negotiate and agree at the bilateral and multilateral APAs with the tax authority of other countries. The applicant must accept the terms of an agreement before a bilateral or multilateral APA is entered with other competent authorities.

Some of Indian tax treaties with major trading partners did not contain paragraph 2 in Article 9 (or equivalent Article) providing for ‘Corresponding Adjustment,’ and this prevented the CBDT from accepting an application for bilateral APA involving these countries. The CBDT, keeping with the spirit of the Report on BEPS Action 146 effective 27 November 2017, has decided to accept bilateral APA applications regardless of the availability of paragraph 2 in Article 9 of the tax treaty. The CBDT accepts a request for bilateral or multilateral APA only when the other country also has a corresponding APA program.

Presently, any taxpayer having international transactions can request an APA. There are no restrictions of any type like minimum threshold on the annual value of related party transactions or nature of transactions for taxpayers seeking an APA. The international transactions under transfer pricing audit or are pending for decision with any judicial authority can also be covered in the APA.

There are some restrictions regarding granting the benefit of the rollback of the APA. One such limitation7 is in regard to non-availability of the rollback in respect of an international transaction for a rollback year if the determination of arm’s length price of the said international transaction for the said year has been the subject matter of an appeal before the Appellate Tribunal, and the Appellate Tribunal has passed an order disposing of such appeal at any time before signing of the agreement.

The rules do not provide for suspension of ongoing transfer pricing audit or investigation during the application process and till signing of the agreement. The taxpayer is protected from the transfer pricing audit in respect of the covered transactions after signing the agreement.

3. Administrative framework

The CBDT has created special teams tasked exclusively for APA. The APA program started in 2013 with one APA Team headed by a Commissioner located in New Delhi and a total of four additional/joint commissioners based in New Delhi, Mumbai, and Bangalore. Eight Deputy/Assistant Commissioners assisted them. Considering a large number of applications filed and for fast-tracking the finalisation of the APA, the CBDT has lately added three more commissioners to the program. However, the officers at lower level not increased. The APA Teams work under the control and supervision of Principal Chief Commissioner of Income Tax (International Tax and Transfer Pricing) based in New Delhi. The APA Teams are responsible for processing both unilateral and bilateral applications and submit the Position Papers to the CBDT. After approval of the CBDT, the APA Team negotiates the terms and conditions with the taxpayer in case of unilateral APA.

In case of applications for bilateral/multilateral APAs, the Competent Authority of India carries out negotiations with the competent authorities of other countries.

4. APA Process

4.1 Request for an APA

An APA is a taxpayer motivated agreement. The APA process starts with the filing of an application8 by the taxpayer in the prescribed form (Form 3CED). There are no monetary limits specified for being eligible to file an APA application. A taxpayer may also request a pre-filing consultation meeting with the APA authorities before submitting a formal APA application. Pre-filing consultation can be also sought on an anonymous basis. Pre-filing consultation is now optional. The pre-filing consultation process is non-binding on both the parties.

The formal application must contain the specified information. The application needs to state the multinational group structure, organisation arrangement, mention covered transactions explicitly, provide FAR analysis of the applicant and all relevant entities for the covered transactions, economic analysis, a copy of inter-company agreements for all covered transactions; audited accounts, and the proposed terms and conditions. A taxpayer is free to cover all or select only some international transactions for the APA. The application can be made for continuing transactions and proposed transactions.

An applicant needs to pay a graded fee9 based on the value of related party transactions proposed to be covered in the APA. An application requesting rollback of the APA requires payment of a fixed fee of INR 500,000. The fee paid is non-refundable except when the application is not allowed to be proceeded with under rule 10 K.

An application requesting a unilateral APA is filed with the Principal Chief Commissioner of Income Tax (International Tax and Transfer Pricing), New Delhi. The application for bilateral/multilateral APA is required to be filed with the competent authority of India. In the case of bilateral/multilateral APA, the associated enterprise must initiate the procedure for entering into APA with the competent authority of other country and evidence of the same shall be furnished to the competent authority.

4.2 Acceptance/rejection of an APA application

The APA application, relevant information, and documents attached to the application are subject to preliminary processing by the APA Team to determine the completeness of the application under the provisions of rule 10K. In case the application is defective due to the absence of information or relevant document is not attached or the requisite fee is not paid, the taxpayer is given an opportunity to remove the defects. The non-removal of defects may lead to rejection of the application after providing an opportunity of being heard to the applicant.

An applicant may request in writing for an amendment to its application at any times before the finalisation of terms of the applicant. Such an amendment application shall be filed with the same authority with whom APA request application was submitted. The applicant is allowed to convert an application for unilateral APA to bilateral/multilateral APA and vice-versa and such a request is not considered to have the effect of altering the nature of the original application. The taxpayer can withdraw an APA application at any stage before the finalisation of the APA.

4.3 Examination and analysis of an APA application

A visit to the applicant’s business premises, taking into account the convenience of the taxpayer, is undertaken to understand the FAR submitted by the taxpayer. The visit provides the APA Team with firsthand information on the underlying business activities concerning the covered transactions and helps it to better understand the facts of the transactions, business model and business realities of the taxpayer. The visit to the business premises also helps the taxpayer and the APA Team to understand each other’s perspectives, concerns and agree on a time frame for completion of the APA process. The visit allows discussion of the issues directly with the responsible officials of the applicant. The focus of the office visit depends on the nature of the business and business model adopted by the applicant.

In case of taxpayers applying bilateral APA, a joint site visit along with the representatives of the other competent authority is also possible. The applicant is expected to give full cooperation for this purpose.

During analysis and detailed evaluation of the application additional information or documentation may be requested. The APA Team is required to do detailed functional analysis and examines the APA application in a reasonable and fair manner taking into consideration all the pieces of evidence and information furnished by the applicant or collected by it. On completion of the analysis and evaluation, the APA Team prepares a position paper (draft report) for submission to the CBDT. In case of unilateral APA, the CBDT directs the APA Team to carry out negotiations on the terms and conditions approved by it. In the case of the bilateral APA, all the process after the receipt of the position paper from the APA Team is handled by the competent authority.

4.4 Entering into an APA

The procedure of negotiations, approval, and signing of the APA is different for unilateral and bilateral APA.

The negotiations with the applicant in case of unilateral APA are carried out by the APA Team.

These negotiations are focussed on the appropriate transfer pricing method, the basis of arriving at arm’s length price or arm’s length results, terms and conditions, critical assumptions, nature of documents to be maintained by the applicant and to be filed along with the Annual Compliance Report.

After completion of the negotiations, a mutually agreed draft agreement is sent to the CBDT by the APA Team for seeking approval of the Central Government. The CBDT signs the agreement with the applicant after obtaining approval of the Central Government.

In case of a bilateral APA, the negotiations are carried out by the competent authority with the other competent authority and the applicant is not a part of the negotiation between two competent authorities, but it may be consulted for this purpose by the Indian competent authority. The provisions of MAP apply regarding the process.

4.5 Taxpayer’s obligations after the signing of the agreement

The applicant is obliged to file a modified return of income, based on the terms and conditions of the agreement, for the completed years of the APA period including rollback years and pay additional tax and interest as per provisions of the ITA.

The applicant is also required to withdraw an appeal pending with the administrative or judicial authorities concerning the covered transactions and for the period covered in the APA.

The taxpayer is also obligated to file an annual compliance report in Form 3CF to the Principal Chief Commissioner of Income Tax (International Taxation) for each year covered in the agreement.

4.6 Revenue’s obligations after the signing of the agreement

The modified return of income filed by the taxpayer is deemed to be a return of income filed under section 139 and all provisions of the ITA apply accordingly. The APA years including rollback years covered in the agreement are not subject to the transfer pricing audit. However, there is no protection from the regular transfer pricing audit of international transactions not included in the agreement. The ongoing transfer pricing audit will be stopped.

The Revenue will withdraw all appeals filed by it before the Income Tax Appellate Tribunal, High Court, and Supreme Court. The jurisdictional transfer pricing officer is required to carry out a compliance audit to ensure compliance with the terms of the APA, including satisfaction of the critical assumptions and consistency of the application of the transfer pricing method.

4.7 Cancellation of an agreement’°

The CBDT can cancel an existing agreement unilaterally after providing an opportunity of being heard to the taxpayer in the following circumstances:

  • the taxpayer has failed to comply with the terms of the agreement;
  • the taxpayer has failed to file the annual compliance report in time;
  • the annual compliance report furnished by the taxpayer contains a material error; or
  • the taxpayer does not agree with the revision of existing agreement proposed by the CBDT.

The cancellation order must be a reasoned order in writing and must specify the effective date of cancellation of the agreement. The agreement can also be cancelled from the very beginning of the effective date for the reason of fraud or misrepresentation of facts by the taxpayer, and the order of cancellation must be in writing detailing the reasons for such a declaration.

4.8 Legal effect of the APA

An APA is binding on the taxpayer and the Commissioner of Income-Tax in relation to the covered transactions. If the taxpayer complies with the terms and conditions of the agreement, the tax administration shall accept the ALP or the application of transfer pricing methodology regarding the covered transactions and period covered in the APA.

The agreement shall not be binding on the tax administration if the taxpayer has obtained the agreement by fraud or misrepresentation of facts.

5. Applications filed and progress made

The tax administration for the first-time accepted applications for APA in the year 2012-2013. Till now, seven cycles of filing applications are over. The applications submitted in a year apply to APA period of five years starting from the 1 April of the next financial year. For example, if an applicant desires that APA should be effective 1 April 2018, the application must be filed by 31 March 2018.

The information in this section is based on the Second Annual APA Report issued by the CBDT.

5.1 APA Applications filed

The first batch of APA applications were submitted in the financial year ending March 2013. The information on the year-wise filing of unilateral and bilateral applications is given below:

Financial Year Unilateral
Applications
Bilateral
Applications
Total APA
Applications
2012-13 117 29 146
2013-14 206 26 232
2014-15 192 14 206
2015-16 113 19 132
2016-17 78 23 101
2017-18 115 53 168
Total 821 164 985

The CBDT has not received any application for multilateral APA till 31 March 2018. In the case of bilateral APA, the taxpayers prefer bilateral APA with the country of the AE with whom significant transactions take place and transactions with the AEs located in other countries are covered through unilateral APA. The table indicates that the majority of the applications filed (84%) are for unilateral APA.

During FY 2018-2019, a total of 123 application for unilateral APA which included 56 for renewal of the APA are filed. Another 46 applications for bilateral APA are also filed.

5.2 Progress on the signing of APA

Only nine unilateral agreements were signed during the first two years of the program. This slow start is for apparent reasons of the program being new, and it takes time to process the application and negotiate an agreement with the taxpayer. The program picked-up pace in later years and this progress is reflected from the year-wise figures of agreements signed till 31 March 2018 as given in the below table.

Financial Year Unilateral Bilateral Total APA
2013- 2014 5 0 5
2014- 2015 3 1 4
2015- 2016 53 2 55
2016- 2017 80 8 88
2017- 2018 58 9 67
Total 199 20 219

The above information is for concluded agreements. There would be a large number of cases at various stages of the processing like cases under negotiations of agreements and cases in the approval process in the CBDT.

In addition to 219 agreements signed, 82 applications did not require processing or processing was abandoned at the various stage for varied reasons including withdrawal of applications by the applicants and merger of multiple applications in taxpayer groups.

The applications received during the initial years of the program mainly belonged to taxpayers having a history of transfer pricing disputes or with multiple types and complex intra-group transactions.

A total of 52 agreements are signed in the year 2018-2019 taking the tally of signed agreements until 31 March 2019 to 271.

5.3 Transfer Pricing Methods Used

Transfer pricing law does not give priority to any of the six transfer pricing methods. The nature of the transaction and availability of reliable information on the comparable or other data help in deciding the selection of the most appropriate transfer pricing method for the APA. The analysis of agreements signed in the year 2017-2018 shows that the Transactional Net Margin Method (TNMM) was used for benchmarking 133 out of 182 transactions. Twenty-one transactions used the Comparable Uncontrolled Price Method. 24 transactions have used the Other Method. Cost-Plus Method11 is used in 3 cases while Internal Resale Price Method is used in one case.

The ‘Other Method’ is not a method prescribed in the OECD TP Guidelines12.This method is increasingly being used in the concluded APAs in India for cases in which application of five established methods become difficult for various reasons for example cases involving complex transactions, or transactions for which comparable data is not available or financial information on independent enterprises is not available.

In the controlled transactions involving the provision of services to the associated enterprises, the TNMM has generally been used as the transfer pricing method, and the operating profit margin (mark up on cost) is the most common profit level indicator used to benchmark results and agreed in the agreements signed.

The significant focus of the evaluation of the APA applications has been on determining the proper operating cost in the captive service providers’ cases wherein TNMM is proposed as the TP method. The cost of the employee stock option plan, restricted stock unit, or a similar incentive provided to the employees of the taxpayer by the parent group entity has been included in the cost base. Similarly, the effect of the use of free of cost assets or assets on loan provided to and used by the taxpayer forms part of the operating cost. The recoveries made from the associated enterprises which are integral to the business operations has been added in the cost base, and mark-up applied. The captive service providers sometimes use the software that is licensed by the service recipient entity from third parties and for which cost is not charged to the applicant. The non-allocation of cost results in a narrow cost base and this becomes different from the cost base of independent enterprises whose cost base include all expenses. Comparability adjustments are made to account for differing amounts of receivable, payable, and inventory. In the case of captive service providers, such an adjustment can be implemented in terms of credit period allowed for the realisation of invoices raised.

There are many other issues that were generally disputed by the taxpayers in transfer pricing audits but settled in the APA. These are for example intra-group services, royalty, and AMP expense.

5.4 Compliance Audit

The taxpayers who have entered APAs with the government are required to furnish an Annual Compliance Report (ACR) for each year covered in the agreement in the prescribed Form 3CEF (Rule 10-O). The transfer pricing officer having jurisdiction over the taxpayer carries out the compliance audit of the agreement for each year covered in the agreement (Rule 10P). Non-compliance of the terms and conditions including Critical Assumption may lead to cancellation of the APA. It is heartening to note that a large number of compliance audits concerning the signed agreements are finalised and no material deviation from the agreed terms and conditions have been pointed out in any case. The CBDT is liberal in accepting minor deviations not having a material effect on the transactions and concluded APA.

The regular transfer pricing audit will not be undertaken for  the international transactions covered in the APA. The regular transfer pricing audit would be restricted to the international transactions not included in the APA. Therefore, it is advisable to cover all the international transactions in the APA to avoid separate transfer pricing audit for the same year.

6. Conclusion

The intra-group trade accounts for approximately 50% of global transactions13. The developing countries like India are likely to have a far more significant proportion of cross border transactions within the MNE groups and subject to transfer pricing regulations. The developing countries have greater exposure to BEPS risks due to being capital and technology importing countries. This requirement potentially increases the usefulness of an effective TP dispute resolution mechanism like APA.

Intensive examination of APA applications and in-depth analysis of international transactions and documents enable a better appreciation of transfer price set by the applicant and their compliance with the arm’s length principle. The 360 degree view of the taxpayer position enables a proper understanding of the transaction and proper determination of arm’s length pricing methodology. A proper APA agreement help collect fair amount of taxes without any dispute.

Filing of a large number of applications by the taxpayers is a testimony of their confidence in the APA Program. The experience suggests that applicants have, by and large, provided full cooperation in the APA process leading to the logical conclusion of the process and signing of agreements. The APA Teams could not process some applications due to non-cooperation from the taxpayers.

The APA Teams have had a good experience in dealing with the applicants and tax intermediaries. There are some issues regarding the non-furnishing of information but this is being looked into. The taxpayers do share information that they may obtain from their associated enterprises. The APA process is very open and transparent, and success depends on the mutual faith amongst the stakeholders. The quality of information filed, FAR, and economic analysis submitted in the applications has improved over the years.

There is a genuine concern about the pendency of a large number of applications for disposal.

A large number of applications have been filed, but processing takes time. The APA Teams will be able to dispose of applications with speed after they gain experience on all types of cases and the taxpayers furnish comprehensive and quality economic analysis along with the application.

There were concerns regarding the confidentiality of the information disclosed in the APA application or furnished during the processing of the application, but in these six years of the APA Program or since the inception of transfer pricing law in India, there have not been any practical problems in this regard.

The APA programme has so far been successful in resolving pending transfer pricing disputes and providing a realistic solution to the potential problems. Many types of difficult issues and complex cases have been solved. The program has provided a desired certainty to the taxpayer on transfer pricing issues and at the same time collected the much needed revenue for the exchequer. The Program is making a noticeable change in the taxpayer’s perception of tax system and tax administration in India. Signing of one agreement resolves 9 potential transfer pricing cases. Signing of more and more APAs will reduce pendency of cases with the administrative and judicial authorities.

The government and the CBDT are committed to effective implementation of the APA Program and have adopted a solution-oriented approach for providing certainty to the taxpayers as far as the issues regarding transfer pricing are concerned.

It is hoped that by providing an efficient, effective and transparent dispute resolution mechanism in the form of APA, the investment climate in the country will certainly improve which in turn help improving India’s ranking in the World Bank ranking of ‘Ease of Doing Business‘.

Notes:-

1- This article is written by Sanjeev Sharma, Commissioner APA, Delhi

2- Guidance and FAQs available at:

http://www.incometaxindia.gov.in/booklets%20%20pamphlets/advance-pricing-agreement-guidance-with-faqs-(tpi-43).pdf (accessed 15.02.2019).

3 – Circular No.10/2015 dated 10th June, 2015 is available at: http://www.incometaxindia.gov.in/communications/circular/circular_no_10 2015.pdf (last accessed 15.02.2019).

4 – See section 92CE of the Act

5 – In unilateral APAs, the risk of potential double taxation remains given that the methodology agreed by the taxpayer with the tax administration of a country may not necessarily be accepted by the counter party tax administration. This risk may increase after the unilateral APAs are exchanged with the tax administration of counter party based on the minimum agreed standards in relation to Action 5 of the G20/OECD BEPS Project.

6 – OECD/G20, Making Dispute Resolution Mechanisms More Effective: Action 14 Final Report

 

8 – Application must be filed in prescribed Form No.3CED available at https://www.incometaxindia.gov.in/Forms/Income-Tax%20Rules/103120000000007772.pdf (accessed 4 March, 2019)

9 – Fee is INR one million for value of international transactions, proposed during the proposed period of agreement, up to INR 1000 million. If the value of international transactions exceeds INR 2000 million, the fee is INR two million. The fee is INR one and a half million for value of transactions between INR 1000 million and INR 2000 million

10 – See rule 10 R of the Rules

11- The CBDT effective 1 April 2012 had prescribed sixth method for computation of arm’s length price under Section 92C of the ITA and Rule 10B of the IT Rules (other five methods are: Comparable Uncontrolled Price Method, Resale Price Method, Cost-Plus Method, Profit-Split Method, and Transactional Net Margin Method).

12 – OECD Transfer Pricing Guidelines for Multinational Enterprises and Tax Administrators 2017

13 – OECD Work on Taxation (2018-19) available at http://www.oecd.org/tax/centre-for-tax-policy-and-administration-brochure.pdf (accessed 4 March, 2019)

Source- CBDT Taxalogue Magazine Jul – Oct 19 | Volume 1 | Issue 1

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