Multinational companies who have filed applications for advance pricing agreements can now file their rollback applications by 30 June 2015
The income tax department has extended the deadline for filing of roll back applications for transfer pricing agreements by three months.
Multinational companies who have filed applications for advance pricing agreements (APAs) can now file their rollback applications by 30 June, against the earlier deadline of 31 March. Finance minister Arun Jaitley had announced the scheme in his July 2014 budget speech but the rules were notified only earlier this month thus leaving little time with companies to file their roll back applications.
Under the roll-back provision, an APA entered into for future transactions may also be applied to international transactions undertaken in previous four years in specified circumstances.
An APA is an agreement between a taxpayer and the tax department on a transfer-pricing procedure for a particular set of transactions detailing the agreed transfer-pricing procedure, arm’s length pricing and details of the transaction under review. APA rules were notified in August 2012.
Transfer pricing refers to the practice of arm’s length pricing for transactions between group companies based in different countries to ensure that a fair price—one that would have been charged for an unrelated party—is levied.
It is one of the major areas of litigation between the tax department and tax payers, with the latter often blaming the government for adopting an aggressive stance to garner more revenues.
Acknowledging the short time window, the income tax department has now extended the deadline for all APA applications filed by 31 March.
(Source: Mint 31 March 2015)