Government of India
Ministry of Finance
Department of Revenue
Central Board of Direct Taxes

PRESS RELEASE

19th December, 2014

SIGNING OF FIRST BILATERAL APA BY CBDT

On 19.12.2014, Central Board of Direct Taxes has signed a bilateral Advance Pricing Agreement (APA) with a Japanese Company. This is India’s first bilateral APA. The APA is for a period of five years. The APA has been finalized in a period of about one and a half years, which is shorter than time normally taken in finalizing APAs internationally.

The APA scheme has been introduced to bring about certainty and uniformity in transfer pricing matters of multi-national companies and reducing litigation. APAs will improve investment climate in the country. In the context of growing economic ties between Japan and India, especially after Hon’ble Prime Minister’s visit to Japan, this APA is expected to generate positive sentiments among Japanese investors in India.

(Rekha Shukla)

Commissioner of Income Tax
(Media & Technical Policy)
Official Spokesperson, CBDT

Note:
The Finance Act, 2012 has introduced Advance Pricing Agreement (APA) provisions by inserting new sections 92CC and 92CD in the Income Tax Act, 1961 wef 01-07-2012. The rules in respect of the APA scheme have been notified (Notification 36/2012 dated 30-08-2012) by the Central Board of Direct Taxes (CBDT) by way of insertion of Rule 10F to Rule 10T and Rule 44GA in the Income-tax Rules, 1962. An APA is an agreement between a tax payer and tax authority determining the transfer pricing methodology for pricing the tax payer’s international transactions for future years. The methodology is to be applied for a certain period of time based on the fulfillment of certain terms and conditions (called critical assumptions).

Download Advance Pricing Agreement (APA) Guidance Booklet with FAQ Click Here >>