Finance ministry approved the Advance Pricing Agreement (APA) scheme, related to transfer pricing regulations.
The APA scheme, proposed in Budget 2012-13, is being considered as one of the major industry-friendly initiatives.
The finance ministry’s green signal to the provisions devised by the Central Board of Direct Taxes (CBDT) would assist implementation of the APA scheme from July 1, 2012. CBDT will release notification of the scheme, after taking approval of the law ministry
The scheme would cover the norms for coverage of cases under APA and also forms for accessing the facilities offered. The applicant has to pay a fee of Rs 10 lakh for international transactions not exceeding Rs 100 crore, Rs 15 lakh for transactions up to Rs 200 crore and Rs 20 lakh for transactions above Rs 200 crore
The Budget introduced new sections in the I-T Act to provide a framework for APA. It strengthened CBDT to enter into an advance pricing agreement with any person undertaking an international transaction.
Advance Pricing Agreement
Advance Pricing Agreement is an agreement inked b/w a taxpayer and a taxing authority on an apt transfer pricing methodology for a set of transactions over a fixed period of time in future. It offers better assurance on transfer pricing methods and is friendly in providing certitude and unanimity of approach