Economy

Income tax department gains Rs 10,000 crore from pact with MNCs: Report

Updated : January 27, 2020 09:24 AM IST

This development will give push to new schemes that will reduce tax litigation and add to the government capitals, the report said.

The pact, known as APA, allows MNCs to negotiate how their profit margins are calculated for five years.

The Income-Tax (I-T) department has made a pay-out gain of Rs 10,000 crore from Advance Pricing Agreement (APA) with multinational companies (MNCs) operating in India, according to a Livemint report.

This development will give push to new schemes that will reduce tax litigation and add to the government capitals, the report said. The APA scheme allows MNCs to negotiate how their profit margins are calculated for five years.

The APA scheme, which was introduced in 2012, was tweaked in 2015 to allow such negotiated profit margins applicable for the past four years as well. This has led to many MNCs revising their past year profit margins upwards, a government official was quoted as saying in the report.

“So far, the estimate is that the department has benefited by more than Rs 10,000 crore, with about 320 APAs having been signed till 2019," the official was quoted as saying in the Livemint report.

Around 60 more APAs have been cleared by the Central Board of Direct Taxes (CBDT) and are waiting to be signed.

The success of the APA scheme may give further push to others that could lessen the cost of tax collection. Also, it will offer tax certainty to the businesses.

Last year, a seven-member task force, led by ex-CBDT member Akhilesh Ranjan, suggested that the concept of mediation could be introduced in law to resolve tax disputes.

Income tax department gains Rs 10,000 crore from pact with MNCs: Report

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