Mutual Settlement Process (MAP) Steerage – Relating to



MAP GUIDANCE/2020


F.No. 500/09/201 6-APA-I

Authorities of India

Ministry of Finance

Division of Income

Central Board of Direct Taxes

International Tax and Tax Analysis Division-I

APA-I Part


New Delhi, dated the 7th August, 2020


Topic: Mutual Settlement Process (MAP) Steerage – Relating to


India has a big community of Double Taxation Avoidance Agreements (‘DTAAs’ or ‘Tax Treaties’, hereinafter) with varied nations. The DTAAs, inter­alia, present guidelines and mechanisms for allocation of taxing rights amongst the treaty companions; avoidance of financial and juridical double taxation; and determination of taxation not in accordance with the treaty by way of the Mutual Settlement Process (‘MAP’, hereinafter).


2. Rule 44G of the Revenue-tax Guidelines, 1962 has been notified lately vide S.R.282 (E) dated 6thMight, 2020. This rule substitutes the earlier guidelines 44G and 44H, which handled the identical challenge of implementation of MAP. The rule offers, inter-alia, the processes to be adopted by the competent authority(ies) (‘CA’ or ‘CAs’ hereinafter)of India until the decision of the difficulty of taxation not in accordance with the treaty and the processes to be adopted by the sector authorities to implement the end result of the MAP. The brand new rule is relevant w.e.f 6th Might, 2020 and, accordingly, applies to all MAP circumstances pending with the CAs of India as on 6th Might, 2020.


3. Although erstwhile guidelines 44G and 44H had been in existence for quite a lot of years, detailed info relating to MAP processes and steerage on points associated to such processes weren’t out there in a complete and consolidated method. The Motion 14 remaining report on “Making Dispute Decision Extra Efficient”, of the Base Erosion and Revenue Shifting (‘BEPS’, hereinafter) venture of the G-20 and OECD nations, had beneficial that each one nations that implement the BEPS package deal of measures should publish complete MAP steerage.


4. In view of the above, the Board has determined to challenge this MAP steerage for the good thing about taxpayers, tax practitioners, tax authorities, and CAs of India and of treaty companions.


5. The MAP steerage is introduced within the following 4 components:


  • Half A: Introduction and Primary Data;
  • Half B: Entry and Denial of Entry to MAP;
  • Half C: Technical Points; and
  • Half D: Implementation of MAP outcomes.

Half A


Introduction and Primary Data


I. Mutual Settlement Process (MAP)


Mutual Settlement Process (MAP) is an alternate tax dispute decision mechanism out there to the taxpayers below the DTAAs for resolving disputes giving rise to double taxation or taxation not in accordance with DTAAs. MAP can assist in relieving double taxation both totally or partially. Virtually all DTAAs entered into by India have the MAP Article and it offers a further dispute decision mechanism to taxpayers along with these out there below the home legal guidelines of India. A taxpayer can request for help below MAP whatever the treatments supplied below the Indian home legislation.


MAP allows the CAs of India to interact with the CAs of different treaty companions and is a course of which facilitates discussions and negotiations between each treaty companions as they endeavour to resolve worldwide tax disputes, which aren’t in accordance with the related DTAAs. At current, India has two CAs for MAP circumstances and they’re senior officers in Division of Income, Ministry of Finance (Joint Secretary, FT & TR-I and Joint Secretary, FT & TR-II). The 2 CAs have been designated as such by the Finance Minister of India. The 2 CAs have territorial jurisdiction over the MAP circumstances relying upon the situation of the treaty companion. The CAs of India are impartial of the tax authorities who audit taxpayers and take their very own selections which are solely administratively ruled by an inside governance mechanism throughout the CBDT, Division of Income.


A MAP request will be made by a taxpayer when it considers that the actions of the tax authorities of 1 or each of the treaty companions outcomes or will end in taxation not in accordance with the related DTAA. MAP circumstances contain cross-border double taxation that might both be juridical double taxation (similar earnings taxed twice within the fingers of the identical entity in two totally different nations) or financial double taxation (similar earnings taxed within the fingers of two separate entities, who’re Related Enterprises, in two totally different nations).


Double taxation or taxation not in accordance with the DTAAs could come up in among the following circumstances:


  • Switch Pricing changes
  • Existence of a Everlasting Institution
  • Attribution of earnings to a Everlasting Institution
  • Characterisation or re-characterisation of an earnings or expense

II. India’s Tax Treaties or DTAAs


India has a big community of tax treaties, virtually all of which comprise a MAP Article primarily based on the provisions of Article 25 of the UN/OECD Mannequin Tax Conference. These tax treaties (learn with part 90 or 90A of the Revenue-tax Act, 1961) represent the authorized foundation for taxpayers to use for a MAP and for CAs to debate and negotiate a MAP case with the endeavour of discovering a decision to the dispute. It will be significant for taxpayers to confer with the textual content of the related tax treaty itself to know the situations for making use of for MAP below that tax treaty. India’s tax treaties can be found at www.incometaxindia.gov.in


All of the DTAAs entered into by India, which comprise a MAP Article as talked about above, require {that a} taxpayer of both treaty companion approaches the CA of its nation of residence to request for a MAP if the tax authorities of the opposite treaty companion make an adjustment or take an motion that outcomes or will end in double taxation or taxation not in accordance with the related tax treaty. In a lot of the tax treaties of India, the time restrict for making an utility for MAP is three years from the primary notification of the motion giving rise to such taxation. In a restricted variety of DTAAs, the time restrict is both much less or greater than three years. Wherever it’s so, it’s anticipated to be modified to a few years as per the advice contained within the remaining report of BEPS Motion 14. India would guarantee this by way of amendments of such poor tax treaties by way of the Multilateral Instrument (‘MLI’, hereinafter) that has already come into impact for India w.e.f 1st October 2019 or by way of bilateral negotiations with the related treaty companions.


III. Making a MAP Software in India


A taxpayer resident in India could make an utility to the CA of India having jurisdiction over the case (relying on the situation of treaty companion) if it considers that the actions of the tax authorities of the treaty companion resulted or will end in taxation not in accordance with the related tax treaty. Such an


utility must be made in Type No. 34F in accordance with rule 44G. The related provision of the rule is as follows:


‘44G (1): The place an assessee, being a resident of India, is aggrieved by any motion of the tax authorities of any nation or specified territory exterior India given that, in keeping with him, such motion shouldn’t be in accordance with the phrases of settlement with such different nation or specified territory, he could make an utility to the Competent Authority in India searching for to invoke the mutual settlement process, if supplied in such settlement, in Type No. 34F.’


The next info and particulars are required to be supplied in Type No. 34F whereas making a MAP utility to the CAs of India:


a) Title of the Applicant;


b) Everlasting Account Quantity (PAN)/Aadhar Quantity;


c) Circle/Ward;


d) Evaluation 12 months(s);


e) Earlier 12 months(s);


f) Workplace Deal with& Phone Quantity;


g) Residential Deal with& Phone Quantity (if relevant);


h) Standing;


i) Title and Designation of Tax Authority within the different nation or specified territory (Treaty Associate);


j) Date of the discover or order giving rise to the motion;


ok) Is the order/motion of the Tax Authority of the Treaty Associate not in accordance with the settlement? If that’s the case, the explanations thereof; and


l) Particulars of treatment sought within the different nation or specified territory, if any, with documentary proof.


Type No. 34F additionally requires details about the identify of the nation or specified territory, the motion of the tax authorities of which have aggrieved the Applicant. In merchandise (ok) above, the Applicant ought to present the info of the case; the evaluation of challenge(s) which are sought to be resolved below the MAP; and the the explanation why the motion taken by the tax authorities are usually not in accordance with the related DTAAs.


Along with the above info and particulars, Type No. 34F requires the next paperwork to be furnished on the time of constructing the appliance:


  • Copy of discover or order giving rise to the motion not in accordance with the related DTAAs;
  • Any doc(s) as assist for contemplating the order/motion of the tax authorities of the treaty companions to be not in accordance with the related DTAAs;
  • Any doc(s) as proof of treatment sought within the different nation or specified territory; and
  • Every other doc that the applicant could wish to submit or the CAs of India could ask for.

If an Related Enterprise or associated get together of an Indian taxpayer submits a MAP utility earlier than the CA of its nation or specified territory of residence (treaty companion), in respect of any order/motion of the tax authorities of India or of the tax authorities of such treaty companion, a duplicate of such MAP utility should even be supplied to the CA of India having jurisdiction over the case. The CAs of such treaty companions are anticipated to expeditiously intimate the CAs of India about their acceptance of a MAP utility.


The MAP utility in Type No. 34F or the copy of the MAP utility filed earlier than the CAs of different nations or specified territories (treaty companions) have to be submitted to the CA of India having jurisdiction over the case. There are two CAs in India. Their particulars are as below:


The place the treaty companion is a rustic or specified territory in Europe and North America (together with the Caribbean) –


Joint Secretary, FT&TR-I,
Central Board of Direct Taxes, Division of Income,
Ministry of Finance, Authorities of India
Room No 803, eighth Ground,
“C” Wing, HUDCO-Vishala Constructing,
Bhikaji Cama Place, New Delhi-110066


The place the treaty companion is a rustic or specified territory in any a part of the world apart from Europe and North America (together with the Caribbean) –


Joint Secretary, FT&TR-II,
Central Board of Direct Taxes, Division of Income,
Ministry of Finance, Authorities of India
Room No 804, eighth Ground,
“C” Wing, HUDCO-Vishala Constructing,
Bhikaji Cama Place, New Delhi-110066


IV. The MAP Course of


As soon as a MAP utility is accepted by the CA of India having jurisdiction over the case, she shall intimate the CA of the related treaty companion about such acceptance by way of a written communication (notification or invocation letter). In such written communication, she would additionally briefly point out why she feels that the motion of the tax authorities of the treaty companion outcomes or will end in taxation not in accordance with the related DTAA. She would additionally request the CA of the treaty companion to offer her written place (place paper) on the order/motion of the tax authorities of her nation.


If a MAP utility is discovered to be not acceptable by the CA of India having jurisdiction over the case, she shall write to the CA of the related treaty companion informing her in regards to the causes for which the MAP utility can’t be accepted and request the latter to ship her views/feedback on the identical (notification and bilateral session). As soon as the CAs of each treaty companions have exchanged views and are available to a typical understanding, the choice on the MAP utility shall be communicated by the CA of India having jurisdiction over the case to the Indian taxpayer who had made the MAP utility.


As has been indicated above, as soon as a MAP utility is accepted, the CAs shall alternate views. Generally, the views shall be communicated by way of place papers. As soon as a place paper is obtained from the opposite CA, the CA of India having jurisdiction over the case would look at the identical and are available to a negotiating place. She may additionally present her personal written feedback to the opposite CA or ask for additional clarification from her. After alternate of positions and feedback, each the CAs would attempt to negotiate a decision to the dispute at hand. They could meet in particular person or negotiate remotely by way of teleconference, video convention, or e mail.


If each the CAs efficiently resolve a MAP case, they might formalise a mutual settlement amongst themselves on the earliest potential. The CA of India having jurisdiction over the case would intimate the Indian taxpayer who had utilized for MAP in regards to the phrases and situations of the decision. Acceptance or rejection of the MAP decision is the prerogative of the Indian taxpayer however in both scenario, the MAP case can be closed by each the CAs as resolved.


If each the CAs are unable to resolve a MAP case, they might shut the MAP case as unresolved. The CA of India having jurisdiction over the case shall inform the Indian taxpayer in regards to the non-resolution of the dispute.


In a reverse scenario, the place the MAP utility has been accepted by the CAs of treaty companions, among the processes described above would circulation within the reverse course.


Along with the above bilateral MAP course of, in acceptable circumstances, the CAs of India can take part in multilateral MAP discussions with a couple of treaty companion. Multilateral MAP circumstances shall contain all of the above processes (like alternate of place papers, negotiations, finalization of mutual agreements, and so on.) on a multilateral foundation amongst the CAs involved. Nonetheless, a multilateral MAP case shall be executed within the type of a collection of parallel bilateral MAP circumstances. The CAs of India can agree to simply accept a multilateral MAP request if all the next situations are fulfilled:


  • All of the taking part nations or specified territories have DTAAs with one another;
  • The transaction or challenge in dispute has a bearing on all of the treaty companions, immediately or not directly, and non-resolution of the dispute would end in taxation not in accordance with the related DTAAs; and
  • The CAs of all of the taking part nations or specified territories comply with negotiating a multilateral MAP.

V. Timeframe for Resolving and Implementing MAP circumstances


India is dedicated to endeavour to resolve MAP circumstances inside a mean timeframe of 24 months. It could be clearly understood that the dedication is to not resolve MAP circumstances inside that timeframe (it is probably not potential for each CAs to agree on a decision in all circumstances) however endeavour to take action. The dedication is in conformity with the minimal requirements beneficial within the BEPS Motion 14 remaining report.


The interval of 24 months is to be computed from the “Begin Date” of a MAP case. Since, presently, a lot of the MAP circumstances earlier than the CAs of India come up from a MAP utility made by a non-resident taxpayer earlier than the CAs of different nations or specified territories (treaty companions), the “Begin Date” is decided by the opposite CAs in accordance with the MAP Statistics Reporting Framework.


At occasions, the CAs of India obtain intimation of MAP circumstances from the CAs of the treaty companions a lot past the “Begin Date”. This leads to delaying the endeavour to resolve such MAP circumstances.


India is totally dedicated to implement the outcomes of every MAP case. It’s the endeavour of India to implement every MAP end result expeditiously. The method and timeframes to implement such outcomes are contained in rule 44G of the Revenue-tax Guidelines, 1962. The rule, inter-alia, offers the next:


  • The way to apply for a MAP;
  • Whom to use to for a MAP;
  • The function of the CAs of India in making an endeavour to resolve tax disputes below the MAP;
  • Timeframes and processes after the decision of a MAP case; and
  • Function of Indian taxpayer and Indian tax authorities after the decision of a MAP case.

The rule will be accessed within the Revenue-tax Guidelines, 1962 that’s out there on our web site www.incometaxindia.gov.in


It can be accessed on the following hyperlink: https://www.incometaxindia.gov.in/information/notification23 2020.pdf


Half B


Entry and Denial of Entry to MAP


I. Entry to MAP


India offers extensive and quick access to MAP to Indian taxpayers if they’re aggrieved by an order/motion of tax authorities of different nations or specified territories (treaty companions) and such orders/actions within the opinion of the taxpayer outcomes or will end in taxation not in accordance with the related DTAAs. The process for making an utility has been mentioned in Half A and the main points will be seen in rule 44G of the Revenue-tax Guidelines, 1962.


India additionally offers extensive and quick access to MAP when the CAs of different nations or specified territories (treaty companions) settle for a MAP utility from their taxpayers after which notify the CAs of India about their acceptance. These MAP circumstances could come up from the order/motion of tax authorities of India or of the treaty companions that within the opinion of the abroad taxpayer outcomes or will end in taxation not in accordance with the related DTAAs.


India shall present entry to MAP in respect of, inter-alia, the next forms of circumstances/conditions in the event that they end in taxation not in accordance with the related DTAAs:


a) Switch Pricing changes;


b) Willpower of existence of a Everlasting Institution;


c) Attribution of earnings to Everlasting Institutions, whether or not admitted or not by the taxpayer;


d) Characterisation or re-characterisation of an merchandise of expense or fee as a taxable expense or fee (like Royalty or Charge for Technical Providers (FTS) or Curiosity); and


e) Characterisation or re-characterisation of an merchandise of receipt as a taxable earnings (like Royalty or Charge for Technical Providers (FTS) or Curiosity).


India shall present entry to MAP even in a scenario the place the Indian tax authorities apply home anti-abuse provisions.


In sure conditions, the place obligation to deduct tax at supply on the fee made by an Indian entity to a non-resident entity is enforced by an order handed below part 201 of the Revenue-tax Act, 1961 and the identical is disputed by the non-resident entity, MAP entry shall be supplied to such non-resident entity anticipating an occasion of double taxation or taxation not in accordance with the related DTAA. Nonetheless, such motion being purely below the home legislation and the order below part 201 not being an order figuring out any tax on earnings, the MAP dialogue shall be taken up solely after the evaluation order is handed within the case of the non-resident taxpayer, and such non-resident taxpayer considers that the evaluation order outcomes or would end in taxation not in accordance with the related DTAA.


There are a couple of circumstances the place India would supply entry to MAP however the CAs of India wouldn’t negotiate some other end result than what has already been achieved in such circumstances. The circumstances are the next:


a) Unilateral Advance Pricing Agreements – The place an Indian or overseas taxpayer enters right into a unilateral Advance Pricing Settlement (UAPA’, hereinafter) with the Central Board of Direct Taxes (CBDT), the CAs of the opposite nations or specified territories could settle for MAP purposes from their taxpayers in respect of such UAPAs if any choice of the tax authorities of such different nations disturbs the earnings declared within the returns filed in pursuance of the UAPAs, and notify the CAs of India. The latter would permit entry to MAP however wouldn’t change the phrases and situations of the UAPA. Moderately, they might request the CAs of the treaty companions to offer correlative aid.


In respect of UAPA purposes into account and negotiation, actions of tax authorities in India or abroad throughout such pendency of UAPA purposes might give rise to taxation not in accordance with the related DTAAs. In such conditions, the CAs of India or the CAs of the opposite nations or specified territories could settle for MAP purposes from their taxpayers and notify one another. Whereas the CAs of India would permit entry to MAP, they might not course of such MAP circumstances until the UAPA is entered into. If the UAPA is entered into, the CAs of India wouldn’t change the phrases and situations of the UAPA and would request the CAs of the treaty companions to offer correlative aid. Nonetheless, if the UAPA shouldn’t be entered into as a consequence of any purpose, the CAs of India would begin processing such MAP circumstances, as all different MAP circumstances.


b) Secure Harbour – The place an Indian or overseas taxpayer applies protected harbour provisions, as relevant on its worldwide transactions, and the return of earnings is accepted by the tax authorities of India, the CAs of the opposite nations or specified territories could settle for MAP purposes from their taxpayers in respect of any choice of the tax authorities of such different nations if such choice disturbs the returns filed in pursuance of such protected harbour provisions, and notify the CAs of India. The latter would permit entry to MAP however wouldn’t change the ALP of the worldwide transactions lined below the protected harbour provisions. Moderately, they might request the CAs of the treaty companions to offer correlative aid.


c) Orders of Revenue Tax Appellate Tribunal – Since MAP and home treatment proceedings will be availed by the taxpayers concurrently, there may very well be cases the place the Revenue Tax Appellate Tribunal (‘ITAT’, hereinafterin India passes an order in respect of the identical disputes which are additionally being examined below MAP. Because the ITAT is an impartial statutory appellate physique, which is exterior the executive jurisdiction of the Indian tax authorities; and is the very best fact-finding physique on tax issues, the CAs in India shall not deviate from the orders of the ITAT for the related 12 months the place the dispute is determined on deserves. In such circumstances the CA of India would request the CAs of the treaty companions to offer correlative aid, if required. Such MAP circumstances shall be closed as having been resolved by a home treatment. Nonetheless, if the order of the ITAT doesn’t resolve the disputes however solely units them apart to be adjudicated afresh, then entry to MAP can be supplied once more after the contemporary adjudication by tax authorities, if requested for by the related taxpayers.


II. Denial of Entry to MAP


The CAs of India can deny entry to MAP in some conditions or in sure specific circumstances. Such conditions and specific circumstances are as follows:


a) Delayed MAP Purposes – If the taxpayers make a MAP utility to the CAs of India or to the CAs of the treaty companions after the expiry of the time interval specified within the Article referring to MAP(equivalent to Article 25(1) second sentence of the OECD Mannequin Tax Conference) of the related DTAAs, the CAs of India wouldn’t present entry to MAP. This time interval in most treaties is inside three years from the primary notification of the order/motion of tax authorities that outcomes or will end in taxation not in accordance with the related DTAAs. India is dedicated to offering this 3-year time interval and virtually all of the DTAAs entered into by India has this time interval. There are only a few DTAAs the place this minimal time interval is lacking, and efforts are on to amend these DTAAs to offer for a similar.


b) Taxpayer’s Objection Not Justified – If the CAs of India come to a conclusion that the objection raised by the taxpayer on the motion taken by tax authorities shouldn’t be justified, they will deny entry to MAP. Nonetheless, earlier than taking a choice to disclaim entry to MAP in such conditions, the CA of India having jurisdiction over the case would focus on the matter with the taxpayer and the CA of the treaty companion. Nonetheless, such session shall not be interpreted as session as to how you can resolve the case.


c) Incomplete MAP Purposes/Paperwork/Data – When an Indian taxpayer makes a MAP utility in India in Type No. 34F, it’s anticipated to be full in all respects. If the CAs of India level out some errors or defects within the utility or ask for extra info/paperwork, the Indian taxpayer ought to treatment the errors/defects and will present the data/paperwork inside an inexpensive time interval. There isn’t a prescribed time interval in rule 44G for the Indian taxpayer to adjust to such extra necessities. Therefore, the CAs of India are anticipated to offer enough time to the taxpayer to treatment the errors/defects and supply the data/paperwork. Usually, a time interval of 30 days for remedying the errors/defects and 90 days for offering the extra info/paperwork must be supplied by the CAs of India to facilitate the method, which will be prolonged by the CAs relying on the info and circumstances of the case.


In respect of MAP purposes accepted by the CAs of treaty companions and subsequently notified to the CAs of India and accepted by the latter, rule 44G offers that the CAs of India can name for info/paperwork from the Indian taxpayers or their representatives. The rule doesn’t prescribe any time restrict upon the taxpayers or their representatives to furnish such info/paperwork. Therefore, the CAs of India are anticipated to offer enough time to the taxpayers or their representatives to offer the data/paperwork. Usually a time interval of 90 days for offering the extra info/paperwork must be supplied by the CAs of India to facilitate the method, which will be prolonged by the CAs relying on the info and circumstances of the case.


d) Revenue-tax Settlement Fee – Sections 245A to 245L in Chapter XIX-A of the Revenue-tax Act, 1961 present for the structure of a fee referred to as the Revenue-tax Settlement Fee (‘ITSC’, hereinafter) for the settlement of circumstances. The ITSC is an impartial statutory dispute decision physique. The method of settlement of disputes by ITSC is impartial from the audit and examination capabilities of tax It’s a voluntary course of and a taxpayer has to use for a settlement of its disputes. As soon as the appliance is accepted, the ITSC examines all elements of the dispute and comes out with a settlement order. If the ITSC points a settlement order, the identical is binding on each the taxpayer and the tax authorities. The CAs of India shall not present entry to MAP to an Indian taxpayer who has already obtained a settlement order from the ITSC and such order covers the problems which are sought to be included within the MAP utility. Equally, the CAs of India shall not admit a case below MAP the place the CAs of the treaty companions have accepted a MAP utility by a taxpayer of their nation or specified territory who (or its related enterprise in India) has already obtained a settlement order from the ITSC and such order covers the problems which have been included within the MAP utility accepted by the CAs of the treaty companions.


The CAs of India shall additionally not present entry to MAP to an Indian taxpayer or admit a case below MAP the place the CAs of the treaty companions have accepted a MAP utility by a taxpayer of their nation or specified territory, if both of such taxpayer’s settlement utility has been admitted by the ITSC and the settlement matter is below examination by the ITSC. Nonetheless, if the ITSC refuses to challenge a settlement order, or points an order with out making a settlement, or the proceedings earlier than the ITSC abate, after which the tax authorities take motion which within the opinion of the taxpayer outcomes or will end in taxation not in accordance with the related DTAAs, the CAs of India shall present entry to MAP to an Indian taxpayer or admit a case below MAP the place the CAs of the treaty companions have accepted a MAP utility by a taxpayer of their nation or specified territory.


e) Authority for Advance Rulings – Sections 245N to 245V in Chapter XIX-B of the Revenue-tax Act, 1961 present for the structure of an authority referred to as the Authority for Advance Rulings (‘AAR’, hereinafter) for giving advance rulings on questions/points introduced earlier than it by a taxpayer. The AAR is an impartial statutory dispute prevention physique. The method of giving advance rulings by AAR is impartial from the audit and examination capabilities of tax authorities. It’s a voluntary course of and a taxpayer has to use for acquiring a ruling. As soon as the appliance is admitted, the AAR examines all elements of the query(s)/challenge(s) introduced earlier than it and pronounces its advance ruling on such query(s)/challenge(s). If the AAR pronounces an advance ruling, the identical is binding on each the taxpayer and the tax authorities. The CAs of India shall not present entry to MAP to an Indian taxpayer who has already obtained an advance ruling from the AAR and such advance ruling covers the problems which are sought to be included within the MAP utility. Equally, the CAs of India shall refuse to confess a case below MAP the place the CAs of the treaty companions have accepted a MAP utility by a taxpayer of their nation or specified territory who (or its related enterprise in India or the related get together to the transaction on which the advance ruling is sought) has already obtained an advance ruling from the AAR and such advance ruling covers the problems which have been included within the MAP utility accepted by the CAs of the treaty


The CAs of India shall additionally not present entry to MAP to an Indian taxpayer or admit a case below MAP the place the CAs of the treaty companions have accepted a MAP utility by a taxpayer of their nation or specified territory, if both of such taxpayer’s utility (or that ofthe related get together to the transaction on which the advance ruling is sought) has been admitted by the AAR and the query(s)/challenge(s) specified within the utility is below examination by the AAR.


Along with the conditions and specific circumstances at (a) to (e) above, it’s clarified that no MAP entry shall be supplied in respect of points which are purely ruled by India’s home legislation and come up because of the implementation of India’s home authorized provisions.


Half C


Technical Points


I. Downward Adjustment


The CAs of India can negotiate a MAP case with their counterparts and withdraw all or a part of the changes made by tax authorities in India. Nonetheless, the CAs of India can’t go under the returned earnings, as the identical is expressly prohibited in Indian home legislation. In respect of switch pricing circumstances, a plain studying of the provisions of sub-section (3) of part 92 of the Revenue-tax Act, 1961 makes it clear that if the appliance of the arm’s size worth of a world transaction leads to decreasing the earnings chargeable to tax or rising the loss, as computed on the idea of books of account maintained, then the provisions of the mentioned part 92 shall not apply. The CAs of India have to stick to this provision whereas negotiating switch pricing MAP circumstances involving changes made by Indian tax authorities.


Nonetheless, in respect of MAP circumstances involving changes made by tax authorities of a treaty companion, the Indian CA could go under the returned earnings of the Indian taxpayer to implement the MAP in full measure in accordance with treaty obligations.


II. Decision of Recurring Points


The CAs of India could resolve recurring points on the identical ideas, as adopted in a previous MAP decision. Nonetheless, they can not resolve such recurring points prematurely of an order/motion by the tax authorities in India. In different phrases, they don’t have the ability to stop the tax authorities from making an order that’s not in conformity with prior MAP resolutions in case of the identical taxpayer and on the identical points.


III. Curiosity and Penalties


In a lot of the disputes on the quantum of earnings, which are resolved below MAP, there are consequential problems with curiosity and penalty. The CAs of India do not need the mandate to think about such consequential points and negotiate disputes arising from such points. These are to be administered below the home legal guidelines. Nonetheless, the place the quantity of curiosity and penalties are linked to the quantum of earnings, such curiosity and penalties shall be different in the identical proportion because the variation within the quantum of earnings as a consequence of a MAP decision, in accordance with the home legislation. It could be famous that there are provisions of charges/penalty below Indian Revenue-tax Act which aren’t linked to the quantum of earnings and, accordingly, these wouldn’t be affected by the decision below MAP.


IV. Secondary Changes


India has a provision to make secondary changes in respect of circumstances the place the first switch pricing adjustment has been made in monetary 12 months 2016- 17 or thereafter. Thus, the CAs of India can be obligated to make such secondary changes a part of the MAP decision in respect of circumstances pertaining to monetary 12 months 2016-17 or thereafter.


V. Bilateral & Multilateral APAs


India has a well-established APA Program that features unilateral, bilateral and multilateral APAs. In respect of points for which a bilateral or multilateral APA utility has already been filed and accepted, MAP purposes on the identical points for a similar years shouldn’t be made by the taxpayers. If such MAP purposes are made both earlier than the CAs of India or the CAs of treaty companions, the CAs of India shall seek the advice of with their counterparts and never admit such MAP purposes. Nonetheless, if a bilateral or multilateral APA utility fails to end in an Settlement for any purpose, then a MAP utility on the identical challenge and for a similar years will be made both earlier than the CAs of India or the CAs of treaty companions and the identical could also be accepted by the CAs of India if it satisfies all situations of a MAP utility.


VI. Suspension of Assortment of Taxes through the Pendency of MAP


With a restricted variety of treaty companions, India has entered right into a Memorandum of Understanding (MoU), below the ambit of the MAP Article, that gives for preserving the gathering of taxes in a case below suspension through the pendency of MAP in that case. The taxes whose assortment will be suspended are those who have arisen from the dispute that’s below dialogue in MAP. Taxpayers have to stick to the phrases and situations talked about within the MoU to have the ability to get the gathering of taxes suspended.


In respect of MAP circumstances with nations the place no such MoU exists within the DTAAs, the home legislation of India (together with Directions/Circulars issued by CBDT) shall govern the procedures associated to suspension of assortment of taxes or keep of demand.


VII Adjustment of taxes paid in pursuance of demand raised by an order below Part 201 of the Revenue-tax Act


Fee of taxes (excluding curiosity) made on account of demand arising out of an order handed below part 201 of the Revenue-tax Act on the Indian taxpayer (payer entity) could also be allowed to be adjusted towards the tax legal responsibility of the non-resident taxpayer(payee entity) within the occasion of decision of MAP within the case of such non-resident taxpayer for the related points and related years.


Half D


Implementation of MAP Outcomes


I. Implementation of MAP


India is dedicated to implementing MAP outcomes in every case. There are not any authorized or administrative impediments to implementing MAP outcomes. The one exception to this normal rule is MAP circumstances wherein an order of the ITAT (for a similar evaluation 12 months that has been resolved below MAP) involves the information of the CAs of India after the MAP has been resolved or is pronounced after the MAP has been resolved however not but carried out.


In respect of the above circumstances/conditions, the MAP outcomes can’t be carried out and the CAs of India would inform their counterparts in regards to the outcomes of the ITAT order and request them to offer correlative aid for the changes sustained by the ITAT, if any.


II. Timelines


The brand new rule 44G, which has been mentioned earlier, offers clear timelines for the taxpayer and the tax authorities in India to implement a MAP that has been resolved by the CAs of each treaty companions. The taxpayer has been supplied a time interval of 30 days (from the date of receipt of a communication from the CAs of India) to convey its acceptance of the MAP decision and to submit proof of withdrawal of home appeals. Conveying of acceptance of the MAP decision inside this time interval is necessary and failure to take action could render the MAP decision unimplementable. Equally, the Assessing Officer has been supplied a time interval of 1 month (from the top of the month wherein he receives the letter of the CA of India having jurisdiction over the case offering particulars of the decision) for giving impact to the MAP decision. These timelines are anticipated to quicken the MAP implementation course of and make it extra environment friendly and efficient.


Whereas intimating the Pr. CCIT involved the main points of decision agreed below the MAP, the CAs of India shall mark a duplicate of their letter to the Assessing Officer, her controlling officer, the CIT/PCIT and CCIT involved, and to the taxpayer to make sure expeditious implementation.


III. Data to CAs of India


The Assessing Officer, along with sending a duplicate of the order giving impact to the MAP decision to the CA of India having jurisdiction over the case, should additionally present info relating to the quantity/date of fee of taxes by the taxpayer or quantity/date of challenge of refund to the taxpayer (because the case could also be), withdrawal of appeals filed by the tax authorities, and some other related particulars.


6. The MAP steerage, as above, could also be adhered and referred to by taxpayers, tax practitioners, tax authorities in India, and CAs of India. If any factor of the MAP steerage is available in battle with the home laws, guidelines, directions, and circulars in India or with the DTAAs entered into by India, the provisions of such home laws, guidelines, directions, and circulars or the DTAAs, because the case could also be, shall prevail.


[Sobhan Kar]

Commissioner of Revenue-tax (OSD), APA

Central Board of Direct Taxes,

Authorities of India


Copy to:


(a) Chairman and Members of the Central Board of Direct Taxes.


(b) CCsIT/Pr. DsGIT/CCsIT/DsGIT with a request to flow into amongst all Officers of their Area.


(c) Joint Secretaries/Commissioners/Administrators/Deputy Secretaries/Underneath Secretaries in CBDT.


(d) Database Cell for importing on the IRS Officers web site.


(e) Internet Supervisor for importing on the Departmental web site.


[Sobhan Kar]

Commissioner of Revenue-tax (OSD), APA

Central Board of Direct Taxes,

Authorities of India






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