CURRENT AFFAIRS

Detailed explanation-1: -The Central Board of Direct Taxes (CBDT) has entered into 62 Advance Pricing Agreements (APA) in FY 2021-22 with Indian taxpayers. This includes 13 Bilateral APAs (consequent to Mutual Agreement between India and its treaty partners) and 49 Unilateral APAs.

Detailed explanation-2: -What is an Advance Pricing Agreement (APA)? An APA is an agreement between a tax payer and tax authority determining the transfer pricing methodology for pricing the tax payer’s international transactions for future years.

Detailed explanation-3: -The Advance Pricing Agreement was introduced in 2012 by the Central Board of Direct Taxes to minimize any confusion regarding the pricing of international transactions through a mutual agreement between the taxpayer and tax authority. India saw the introduction of the Advance Pricing Agreement in the year 2012.

Detailed explanation-4: -Advance Pricing Agreement or APA is an agreement or deal between two entities-the tax authority (CBDT in India) and the taxpayer, regarding the transfer pricing methodology to price the taxpayer’s future years’ international transactions.

Detailed explanation-5: -92CC. (1) The Board, with the approval of the Central Government, may enter into an advance pricing agreement with any person, determining the arm’s length price or specifying the manner in which arm’s length price is to be determined, in relation to an international transaction to be entered into by that person.