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In a significant development for India’s tax landscape, the Central Board of Direct Taxes (CBDT) has achieved a remarkable milestone by signing 125 Advance Pricing Agreements (APAs) during the fiscal year 2023-24.

Detailed Analysis

1. Record-Breaking Performance: The 125 APAs signed by the CBDT in FY 2023-24 represent a historic high, showcasing a substantial increase compared to the preceding financial year. Among these, 86 are Unilateral APAs (UAPAs), while 39 are Bilateral APAs (BAPAs). This surge in APA signings underscores the growing importance of transfer pricing regulations and the efforts to provide certainty to taxpayers.

2. International Collaborations: Notably, the CBDT’s efforts have led to the signing of a significant number of BAPAs, strengthening India’s ties with key treaty partners such as Australia, Canada, Denmark, Japan, Singapore, the UK, and the US. These agreements not only facilitate smoother cross-border transactions but also mitigate the risk of double taxation, providing much-needed assurance to multinational enterprises (MNEs).

3. Impact on Transfer Pricing Landscape: The APA Scheme plays a pivotal role in ensuring predictability and transparency in transfer pricing matters. By allowing taxpayers to determine the arm’s length price of international transactions in advance for up to five future years, and even offering the option to rollback for four preceding years, the scheme provides a solid framework for tax planning and compliance.

4. Ease of Doing Business: The significance of the APA programme extends beyond tax compliance. It aligns with the Government of India’s broader agenda of promoting ease of doing business, particularly for MNEs with complex cross-border operations. By offering a mechanism for resolving transfer pricing disputes and providing a conducive environment for investment, the programme enhances India’s attractiveness as a business destination.

Conclusion

The CBDT’s achievement of signing a record number of APAs in FY 2023-24 reflects its commitment to fostering a taxpayer-friendly environment while upholding the integrity of the tax system. The increasing adoption of APAs not only instills confidence among taxpayers but also reinforces India’s position as an investment-friendly jurisdiction. Moving forward, sustained efforts to streamline transfer pricing regulations and enhance administrative efficiency will be crucial for maintaining this positive momentum and facilitating sustainable economic growth.

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Ministry of Finance

CBDT signs record number of 125 Advance Pricing Agreements (APAs) in FY 2023-24

Total 641 APAs done since inception of the APA programme

Posted On: 16 APR 2024 8:04PM by PIB Delhi

The Central Board of Direct Taxes (CBDT) has entered into a record 125 Advance Pricing Agreements (APAs) in FY 2023-24 with Indian taxpayers. This includes 86 Unilateral APAs (UAPAs) and 39 Bilateral APAs (BAPAs). This marks the highest ever APA signings in any financial year since the launch of the APA programme. The number of APAs signed in FY 2023-24 also represents a 31% increase compared to the 95 APAs signed during the preceding financial year. With this, the total number of APAs since inception of the APA programme has gone up to 641, comprising 506 UAPAs and 135 BAPAs.

During FY 2023-24 CBDT also signed the maximum number of BAPAs in any financial year till date. The BAPAs were signed as a consequence of entering into Mutual Agreements with India’s treaty partners namely Australia, Canada, Denmark, Japan, Singapore, the UK and the US.

The APA Scheme endeavours to provide certainty to taxpayers in the domain of transfer pricing by specifying the methods of pricing and determining the arm’s length price of international transactions in advance for a maximum of five future years. Further, the taxpayer has the option to rollback the APA for four preceding years, as a result of which, tax certainty is provided for nine years. The signing of bilateral APAs additionally provides the taxpayers with protection from any anticipated or actual double taxation.

The APA programme has contributed significantly to the Government of India’s mission of promoting ease of doing business, especially for Multi National Enterprises () which have a large number of cross-border transactions within their group entities.

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