An advance pricing directorate envisaged to formulate and govern advance pricing agreements (APA) and transfer pricing (TP) norms between the income tax authority and Indian subsidiary of global MNCs is coming soon, said Som Mittal, president, National Association of Software and Services Companies (Nasscom).
In simpler terms, an APA alongwith TP is a mutually agreed taxing methodology between the I-T administration and an Indian arm of a foreign firm on the mechanism of taxing the goods and services transferred by the parent to its Indian arm or vice versa.
??There is a capacity-building exercise carried out among income tax officers to acquaint them with APA and TP rules and procedures. There are about 700 firms here undergoing TP audit. Yes, there is a proposal to set up an APA directorate. The introduction of APA and TP norms would help in three to four years of litigation-free income tax assessment?,? Mittal told FE. On how TP and APA regime would shape up and mature in Indian context, Mittal said a pattern would emerge on predictable litigation arising from similar business models of firms engaged in different areas of business of the same sector that helps in strengthening the APA and TP tax practice.
Clarifying that APA need not be held back until the time of Direct Tax Code (DTC) rollout, he added that provisions for APA have already been culled out and released as draft APA document from the DTC and the introduction of APA is not continent upon the former. The Nasscom president who got his extension till 2014, to look into the grievance of the IT and BPO industry has resolved issues like service tax refund that would be trickle in from July onwards.
On the question of Nasscom representing the interests of all sections of IT and BPO community with equal zeal, he said the executive council of Nasscom has broad spectrum of representation from the IT and BPO and other allied sectors. “Vikram Talwar co-founder of Exl services is heading our BPO forum, Keshav R Murugesh group CEO of WNS global services is assuming charge as co-chairman of BPO forum, Roopa Kudva MD and CEO of CRISIL is heading the analytics part of industry, Sangeetha Reddy, MD of Apollo Health street chairs healthcare BPO chapter, Deep Kalra founder CEO of MakeMyTrip.com represents internet companies”.