CBDT signs record number of 125 Advance Pricing Agreements in fiscal 2023-24

Apr16,2024



Mumbai: Central Board of Direct taxes ,cbdt) has joined the record 125 advance pricing agreements (APA) in the financial year (FY) 2023-24 Indian taxpayer,
This includes 86 Unilateral APA (UAPA) and 39 bilateral apa (BAPA). This is the highest ever APA signatures in any financial year since the launch of the APA program.
The number of APAs signed in FY 2023-24 also shows an increase of 31% compared to 95 APAs signed during the previous financial year. With this, the total number of APAs has reached 641, including 506 since the inception of the APA programme. UAPA and 135 BAPA.
During FY 2023-24, CBDT signed the highest number of BAPAs in any financial year so far. BAPAs were signed as a result of India entering into reciprocity agreements with its treaty partners namely Australia, Canada, Denmark, Japan, Singapore, UK and US.
In 2013–14, which was the first full financial year (since the APA became operational in August 2012), only 5 agreements were signed by the CBDT. Since then, the number of APAs concluded annually has been increasing rapidly.
The APA is a mechanism to resolve transfer pricing disputes in advance. Transactions between related parties (such as an Indian subsidiary providing software development to its US parent company) are required to be at arm's length, meaning that no unfair pricing advantage will be provided.
Transfer pricing provisions in income tax (IT) laws determine whether pricing is at an arm's length, ensuring that profits in a country (in this case, India) are properly captured. And no IT revenue is lost. APAs with roll-back provisions, which give IT certainty to the applicant (taxpayer) for nine years, were introduced from 2015.
Signing a bilateral APA protects taxpayers from any anticipated or actual double taxation.
CBDT in its release has stated that the APA program has significantly contributed to the Government of India's mission of promoting ease of doing business, especially for MNEs who have a large number of cross-border transactions within their group entities.



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