Lecture on “Safe Harbour Rules and International Taxation issues”

The Federation of Andhra Pradesh Chambers of Commerce and Industry (FAPCCI) organized a Lecture on “Safe Harbour Rules and Panel Discussion on Specified Domestic Transactions and other International Taxation issues” on November 16, 2013 at Federation House, Red Hills, Hyderabad.

Mr. Madan, Chartered Accountant - Tax & Regulatory Services, Ernst & Young Pvt. Ltd., Mr. H. Srinivasulu, IRS., (Retd.), Advisor – Direct Taxes, Deloitte, Mr. Samuel Nagadesi, Chartered Accountant, Ms. Anshu Khanna, Chartered Accountant, Mr. Srinivas Ayyadevara, President, FAPCCI, Mr. Anil Reddy Vennum, Vice President, FAPCCI and Mr. Abhay Kumar Jain, Chairman, Direct Taxes Committee, FAPCCI was the key speakers for this occasion.

Mr H. Srinivasulu, IRS., (Retd.), Advisor – Direct Taxes, Deloitte gave a detailed power point presentation on “Specified Domestic Transactions” He stated that the Finance Act 2012” extended the scope of Transfer Pricing provision to “Specified Domestic Transactions” (SDT).The provision apply from the financial year 2012-13 onward if the aggregate value of the transaction exceed INR (Indian National Rupee) 50Million in the relevant financial year.SDT includes payment to related parties, inter-unit transfer of goods or services of profit-linked tax holding-eligible units, transactions of profit-linked tax holding-eligible units with other parties and any other transactions that may be notified by the CBDT. By extending Transfer pricing provision to SDT, pricing of these transactions will need to be determined with regard to arm’s length principles using method prescribed under TP regulation.TP regulation will now applicable to all taxpayers including Individuals, Hindu Undivided Families (HUFs).The risk of tax arbitrage abuse by opportune taxpayers may arise due to presence of accumulated losses or differential tax rates.

CA Madan from Ernst & Young Pvt. Ltd. Focus on “Advance Pricing Agreement & Safe Harbors – Indian scenario”.

►APA provisions introduced w.e.f July 1, 2012

► APAs are valid for a maximum period of 5 consecutive years

► Binding on taxpayer and tax authorities, unless there is a change in law/facts

► No provision for “roll back”

► Bilateral APAs, Withdrawal and Amendments to application permitted under the Rules

► Application needs to be filed by 31 March 2014 for APA to be applicable for FY 2014-15 and subsequent years

► New rules introduced in Income-tax Rules, 1962 - Rules 10F - 10T & Rule 44GA