The CBDT Issues India's First APA Annual Report

Advance Pricing Agreement (APA):

Transfer pricing remains the most widely talked international taxation issue. Indian transfer pricing regulations came into effect on 1 April 2001 and have been one of the critical tax issues for Multinational Enterprises (MNEs) operating in India. India was in focus due to colossal transfer pricing adjustments made in past few years in the case of international transactions entered into by MNEs. Due to this, the international business fraternity had felt that taxation policies of India are not business friendly.

In response to the issue given above and to align the Indian transfer pricing regulations with global best practices, Advance Pricing Agreement (APA) scheme was introduced by the government in late 2012 followed by the 'Rollback' provisions in 2014. The APA scheme is a major initiative of the government towards fostering a non-adversarial tax regime which provides alternate dispute resolution mechanism to taxpayers in