Released as Notification No. 36 of 2012 (dated 30 August 2012) [PDF 743 KB], the guidance inserts Rules 10F to 10T to introduce the APA regime. The APA program guidance will be effective on its date of publication in the official gazette.
Overview of APA program
The notification establishes an APA program in India. Among the provisions are:
- Measures requiring mandatory pre-filing consultations, but allowing taxpayers to have anonymous pre-filing consultations
- Provisions establishing the rules for bilateral, multilateral, and unilateral APAs
- Rules establishing the APA application process, and allowing applications to be modified and/or withdrawn
- No provision allowing for “rollbacks” with respect to an APA
- Directives that the tax administration’s APA team is to be comprised of individuals with experience in economics, statistics, law, and other appropriate disciplines, in addition to the Revenue team
- Provisions that the APA guidance will apply to existing as well as new international transactions
- Measures allowing for the renewal of APAs
- The APA filing fee schedule—to range from Rs 10 lakhs - Rs 20 lakhs (approximately U.S. $18,000 - $36,000) based on the value of international transactions
With an initial review of the APA guidelines, tax professionals have noted that India’s APA regime is a positive development for taxpayers in that it will allow for greater certainty.
Other positive developments with respect to the APA program are that it includes rules allowing taxpayers to seek bilateral and multilateral APAs, as well as unilateral APAs; allowing for anonymous pre-filing consultations; and providing that the tax administration’s APA team is to be composed of “focused” APA members, composed of individuals with experience in a range of fields (economics, statistics, law, and other appropriate areas).
Yet, it has been observed that the APA rules do not suggest a time frame for the tax administration’s disposal of an application, that no rollback is allowed, and that no “firewalls” are established.
Read an August 2012 report [PDF 156 KB] prepared by the KPMG member firm in India: Advance Pricing Agreement Rules notified in India
For more information, contact a tax professional with KPMG’s Global Transfer Pricing Services:
Rohan K. Phatarphekar
+91 (22) 3090 2000
+1 (202) 533 3025
* Alpana Saksena is currently located in the United States, having joined KPMG after spending more than 25 years with the Indian Revenue Service.
Or contact a tax professional with KPMG's Global Transfer Pricing Services.