CURRENT AFFAIRS

Detailed explanation-1: -The Central Board of Direct Taxes (CBDT) on Friday entered into a Bilateral Advance Pricing Agreement (BAPA) with Indian subsidiary of a Japanese trading company. The CBDT, recently, also modified an existing Bilateral APA with another Indian subsidiary of a Japanese company to include rollback provisions.

Detailed explanation-2: -In general, a bilateral APA is a binding agreement between two tax administrations and the taxpayers concerned. This is entered into by reference to the relevant double taxation convention. It governs the treatment for tax purposes of future transactions between associated taxpayers.

Detailed explanation-3: -Bilateral Advance Pricing Arrangements (“BAPAs”), in a growing number of cases, have successfully contributed to providing advance tax certainty to both taxpayers and tax administrations, ensuring predictability in the tax treatment of international transactions.

Detailed explanation-4: -The Transfer Pricing (TP) Regulations were introduced in India in the year 2001, in order to prevent erosion of Indian tax base. The Indian TP Regulations are contained in Chapter X of the Income-tax Act, 1961 (“the Act”) under the title “Special Provisions relating to avoidance of tax”.