Advance Pricing Agreement in India - an introduction

1. THE ADVANCE PRICING
AGREEMENT (APA) PROGRAM-
AN INTRODUCTION

2. Scheme of the presentation
•What is an APA
•What does an APA do
•TheAPA process

3. Timeline of the APA program in India
Year Milestones
Finance Act
2012
Advance Pricing Agreement provisions
introduced
30 August 2012 Advance Pricing Agreement Scheme notified
March 2013 First round of applications: 146 received
May 2013 Advance Pricing Agreement FAQs issued
March 2014 First unilateral APA signed
December 2014 First bilateral APA signed

4. Timeline……
Year Milestones
Finance Act
2014
Rollback provisions in APA scheme introduced
March 2015 Rollback Rules notified
June 2015 Circular no. 10/2015 on clarifications on
rollback provisions issued
August 2015 First APA with rollback signed
September 2016 100 APAs signing mark crossed
As on date More than 375APAs signed

5. What is an APA?
• An agreement between the Government of India
(represented by the CBDT) and the person, which
determines, in advance, the arm’s length price (ALP)
or specifies the manner of the determination of ALP
(or both), in relation to an international transaction;
• Binding on Applicant and Government;
• APA is for term of five years;
• With Rollback of APA – maximum can be nine years.

6. What does an APA do?
• Provides certainty inTax matters;
• Form of tax dispute resolution;
• Reduces the compliance burden on the Applicant;
• Assures the Revenue of just and fair tax;
• Reduces pressure on theTransfer Pricing audit process;
• Reduces pressure on the litigation machinery;
• Allows the TPOs time to concentrate on cases that might
have otherwise missed attention;
• Does not:
• Provide guidance toTPOs;
• Create binding precedents.

7. The APA Process
• Legal framework is in sections 92CC and 92CD;
• The Relevant Rules are Rules 10G to Rules 10T;
• Articles 9(2) and Article 25 in the DTAA;
• Types of APAs are:
• Unilateral – application to PCCIT (Intl Tax) and are only
between Applicant and CBDT and;
• Bilateral and Multilateral – application to Competent
Authority (CA) in India as well as in country of AE
(between CAs of two or more countries).

9. APA Process
• Begins with filing of application- with PCCIT (IT) for
UAPA and CA for BAPA, along with fee;
• PCCIT (IntlTax.) shall assign the case to one team;
• The team shall examine and analyze the application;
• Detailed analysis of FAR, international transactions,
transfer pricing method’;
• SiteVisit, if necessary;
• Position Paper prepared;
• Sent to the PCCIT for approval who will forward to
CBDT.

10. APA Process….
• Unilateral:
• CBDT will analyze and give approval for negotiation on certain
terms;
• APA team negotiates with the Applicant as per terms set by
CBDT;
• Mutually Agreed Draft Agreement will be approved by CBDT;
• Agreement signed between both parties (FT&TR and
Applicant);
• Bilateral:
• Negotiation by the competent authority in bilateral/multilateral
APA;
• After receipt of draft position paper, Indian CA to negotiate
with CA of other country as per Rule 44GA.

11. THANKYOU!!