Statement from Rohan Phatarphekar, Head of Transfer Pricing, KPMG in India on Advance Pricing Agreement (APA) Rollback Rules

The Government has announced the most awaited Advance Pricing Agreement (APA) rollback rules. The APAs can now be rolled-back for a period of 4 previous years provided the same international transactions are sought to be covered and the impact of roll-back does not result into reducing of income or increasing of losses reported in timely filed tax returns of those previous years.

The introduction of APA rollback rules is positive and encouraging move that the Government is giving an option to roll-back APA terms to all taxpayers even those who have already filed for APAs in the past or the handful of taxpayers who have already signed APAs with the Government. These taxpayers along with those who intend to file fresh APA applications effective from financial year 2015-16 have been given a short window of about 15 days to file roll-back applications till 31 March 2015. The deadline of March 31, 2015 seems to be stringent and it would have been helpful if tax payers would have at least been given time till June 30, 2015.

On bare reading of the APA rollback rules few questions arise and lead to some ambiguity for example whether once a taxpayer files a roll-back application will he be able to withdraw the same or will have to withdraw the entire APA application