India, US Resolve 35 Transfer Pricing Disputes In IT Industry

by CXOtoday News Desk    Aug 07, 2015


For concepts such as Digital India and Make In India to succeed, it is essential to collaborate with companies around the world, encourage investment (from both foreign investors and domestic players) and create an ecosystem conducive for business growth. The Government of India is fast realizing this fact and is trying every mean to uphold its relationship with other countries.

In a step to this direction, the Government has resolved 35 transfer pricing disputes with the US in the Information Technology (IT) space and another 100 are likely to be settled in the next three months. A Framework Agreement was recently signed with the US under the Mutual Agreement Procedure (MAP) provision of the India-US Double Taxation Avoidance Convention (DTAC). 

“This is a major positive development,” the Central Board of Direct Taxes (CBDT) told PTI.

Around 200 transfer pricing disputes between the two countries in IT Services and ITeS segments are expected to be resolved under this Agreement during the current year. The Framework Agreement with the US opens the door for signing of bilateral Advance Pricing Agreements (APAs) with Washington, the CBDT said.

“The MAP programs with other countries like Japan and UK are also progressing very well with regular meetings and resolution of past disputes.

“These initiatives will go a long way in providing stable tax environment to foreign investors doing business in India,” said the CBDT, which is responsible for direct tax collections in the country. 

CBDT has also signed 14 APAs related to sectors like telecom, oil exploration, pharmaceuticals, finance, banking, software development services and ITeS (BPOs) as part of a “major initiative” to usher in certainty in taxation. APAs settle transfer prices and the methods of setting prices of international transactions in advance.