India: Advance Pricing Agreement (”APA”) Statistics

published on 14 November 2018

Central Board of Direct Taxes (”CBDT”) achieves another milestone by resulting in additional income of about INR 10,000 crores through APA Programme.

CBDT has published its second Annual Report (FY 2017-18) in the month of August 2018. Accordingly, the Indian APA programme has been appreciated nationally and internationally as complex transfer pricing issues which were prone to long drawn litigation are being increasingly resolved through APAs. CBDT Annual Report states that even though revenue collection is not primary objective of the Indian APA Programme, it is estimated that 219 signed APAs have resulted in additional income of about INR 10,000 crores and it resulted in tax payment of INR 3,000 crores without getting into litigation or there being any dispute.

Amendments in clauses of Tax Audit Report (Form 3CD) relating to Transfer Pricing Provisions CBDT issued amendments in the tax audit report vide notification no. 33 dated July 20, 2018. These amendments shall come into force from August 20, 2018.

Following are the amendments relating to transfer pricing provision:

1. Clause 30A form 3CD: Secondary adjustment

During the previous year, where primary adjustment has been made to Transfer Price (exceeding INR 10 Mio.), suomoto by the Assessee or by the Assessing Officer or as per APA or safe harbour rule or as a result of Mutual Agreement Procedure, as per provisions of Section 92CE(1) following disclosures need to be given under this clause:

Details of the clause under which the primary adjustment is made;
Amount of primary adjustment;
Whether excess money is repatriable and if yes, within prescribed time (i.e. 90 days);
If it is not repatriated, then amount of imputed interest on such excess money.

2. Clause 30B of form 3CD: Thin Capitalisation

If assessee has incurred expenditure as referred in Section 94B during the previous year by way of in-terest or similar nature exceeding INR 10 mio paid to the non-resident associated enterprise, then the following details need to disclosed:

Amount of expenditure by way of interest or similar nature;
Earnings before interest, tax, depreciation and amortization (EBITDA) during the pre-vious year;
Amount of interest exceeding 30 percent of EBITDA;
Details of Interest expenditure brought forward and carried forward.

3. Clause 43 of form 3CD: CBCR Compliance

Where assessee being a resident parent entity or alternate reporting entity require to furnish a detailed CbC Report in Form 3CEAD to the prescribed authority, then following details need to furnish under this clause: