Central Board of Direct Taxes (CBDT) signed record 125 Advance Pricing Agreements (APAs) in FY 2023-24

Posted 18 Apr 2024

2 min read

This marks the highest ever APA signings in any financial year since the launch of the APA programme (2012).
- 125 APAs includes 86 Unilateral APAs (UAPAs) and 39 Bilateral APAs (BAPAs).
APA is an agreement between the Tax Authority and any person (taxpayer), which determines, in advance, the arm’s length price or specifies the manner of the determination of arm’s length price (or both), in relation to an international transaction.
- Arm’s length price refers to a deal in which parties act independently without one party influencing the other.

Key Features of APA:
- Signed under the Income-tax Act, 1961
- Voluntary in nature.
- Duration: Maximum of 5 future years (further, can be extended for 4 more proceedings years).
- Types of APAs:
  - Unilateral: Involves only the taxpayer and the tax authority of the country where the taxpayer is located.
  - Bilateral: Involves the taxpayers, the tax administration of the host country and the foreign tax administration
  - Multilateral: Involves the taxpayers, the tax administration of the host country and more than one foreign tax administration.

Key Benefits:
- Supplements Double Taxation Avoidance Agreement (DTAA) mechanism for resolving transfer pricing dispute.
- Promotes ease of doing business, especially for Multi National Enterprises.

A statutory body, established as per the Central Board of Revenue Act, 1963.
Ministry: Works under the Department of Revenue, Ministry of Finance.
Functions: Formulating policies concerning the assessment and collection of direct taxes.

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