Amendment in Mutual Agreements Procedure (MAP) Rules -A taxpayer’s tool reinvented


Mutual Agreements Procedure (MAP) is a model or mechanism available to taxpayers to resolve disputes that have arisen due to double taxation. When two countries enter into an agreement to avoid double taxation, it gives a clear pathway to the concerned authorities under MAP in those particular jurisdictions. Article 25 of the OECD Model Convention for the Avoidance of Double Taxation talks about assistance of Competent Authorities under MAP.

The foremost benefit of MAP is avoidance of double taxation. It is very rare that a case under MAP is not resolved. Study report states that many tax-related disputes have been resolved between April, 2014 and December, 2018 with the MAP. The MAP resolution, once accepted, eliminates the need for unnecessary litigation.

Amendment in Mutual Agreements Procedure (MAP)


Prior to the amendment, Rule 44G of the Income Tax Rules, 1961 (the Rules), which deals with the application & procedure for giving effect to MAP agreement, provided only for the invocation of MAP i.e. any assessee aggrieved by the action of tax administrative of any foreign country, which attracts the provision of tax, which are not in accordance with tax convention/ tax treaties may make an application in Form No. 34F for invoking the MAP.

The Central Board of Direct Tax (CBDT) vide notification no 23/2020/F.No. 370142/31/2019-TPL dated 06.05.2020 has amended Rule 44G of the Rules and revised the Form 34F with respect to making application to Competent Authority for invoking MAP.

The amendment in rule 44G now state:

> The Competent Authority in India shall endeavor to arrive at a mutually agreeable resolution of the tax disputes, in accordance with the agreement between India and the other country or specified territory within a specified average time period of 24 months.

>  Further it states that if a resolution is so arrived, the assessee shall communicate his acceptance or non-acceptance within 30 days.

> The Assesse, upon the acceptance of the resolution, shall withdraw any appeal, which he might have filed in this regard and pay the tax determined by the Assessing officer (AO) after giving effect to the resolution.

> As far as Form No. 34F is concerned, the amendment requires the competent authority in India to call for relevant records from the income tax authorities and the assessee to understand the actions taken by the authorities that are not in accordance with the terms and conditions of the agreements between India and the other country.

>  Form 34F which has been revised in the aforesaid amendment seeks details of remedy sought along with documentary evidence.

As per the amendment, Rule 44H has been omitted, which prior to the amendment had provided for the action by the Competent Authority of India and procedure for giving effect to the decision under the agreement.

The aforesaid amendment is in line with the recommendations provided under Base Erosion and Profit Shifting (“BEPS”) Action Plan 14 i.e. Making Dispute Resolution Mechanisms More Effective.

OECD states that “The BEPS Action 14 Minimum Standard seeks to improve the resolution of tax-related disputes between jurisdictions. Inclusive Framework jurisdictions have committed to have their compliance with the minimum standard reviewed and monitored by its peers through a robust peer review process that seeks to increase efficiencies and improve the timeliness of the resolution of double taxation disputes.”


MAP provides for a cost effective alternative to multiple litigation processes and such proceedings are binding on tax authorities in India. Major benefit of MAP is that it is not binding on the taxpayer and he can still continue with the domestic remedies available under the Act, i.e. it’s not a mandatory remedy which tax payer needs to opt for, it’s an additional remedy available to the taxpayer.

The new amended rules under Rule 44G of Income Tax Rules, 1962 clearly show the intention of the Indian government to encourage settlement and avoid unnecessary litigation, which would help in faster resolution than traditional litigation process.


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February 2024