146 applications filed for APAs, says CBDT chairperson
Oct 17 2013 , New Delhi
"Since the APA regime was introduced last year in August, as on today, 146 applications have been filed for APAs," Central Board of Direct Taxes (CBDT) chairperson Sudha Sharma said at an event organised by an industry body here.
The CBDT had announced APA rules which allows companies to seek guidance on pricing of goods and services in advance, with a view to reduce transfer pricing tax disputes.
APA is a pact, usually for multiple years, between a taxpayer and a taxing authority (Central Board of Direct Taxes in India) on an appropriate transfer pricing methodology for a set of international transactions in future.
As per the APA rules notified by the Finance Ministry, a person who has undertaken an international transaction or is contemplating one, can enter into the agreement with the CBDT.
About Rs 60,000 crore is locked up in litigation related to transfer pricing - a mechanism used by MNCs in transaction prices between its different entities. The mechanism is allegedly abused by some companies to transfer profits to their subsidiaries in low tax countries.
A company which is proposing to enter into an APA has to necessarily attend a pre-filing consultation with the CBDT.
However, firms have been given option to remain anonymous during pre-consultation stage if they do not want to share all the details initially with tax authorities.
Fee for entering into APA with the CBDT is Rs 10 lakh for international transaction up to Rs 100 crore, Rs 15 lakh for those up to Rs 200 crore and Rs 20 lakh for transactions above Rs 200 crore, the rules had said.
Though the provision for APA was included in the proposed Direct Taxes Code (DTC) Bill, the Centre had brought forward its implementation by including it in Finance Bill 2012.