APA — India: is this a do-it-yourself job?
Some of it, yes — and we will say so on the call if that is the honest answer. The parts that are worth paying for are the ones where a missed election, a missed deadline or an unverified threshold costs more than the fee: applications proceed through pre-filing, filing, analysis and negotiation, unilaterally or bilaterally, with an annual compliance report afterwards.
What if I have already filed and got it wrong?
That is a common starting point. We re-derive the position, identify whether an amendment or a disclosure route is the right vehicle, and tell you which one preserves the relief that is still available. The order matters more than the speed.
How long will it take?
It depends on the documents rather than on us. Once the pack is complete most filings turn around inside a fortnight; anything that needs a certificate from a tax authority runs on that authority's timetable, which we tell you at the start rather than at the end.
Can an India APA cover years that are already under assessment?
That is what the rollback facility is for. India's advance pricing programme is unusual in allowing an agreement reached for future years to be applied backwards to specified earlier years, provided the transactions in those years are the same ones the agreement covers. It is the rare mechanism that settles the past as well as the future. It is not automatic. The earlier years have to be requested, and the facts in them have to match. Where the functions or the contractual terms shifted partway through the period, only the years that genuinely match can be brought in. We look at the earlier years before the application is framed, because the shape of the application decides what the rollback can reach.
Should we apply for a unilateral or a bilateral APA?
A unilateral agreement binds the Indian authority only. It gives certainty on the Indian side and it is the shorter road, but the other country remains free to take a different view of the same transaction, and double taxation is not resolved by it. A bilateral application brings both authorities into the negotiation, so the price agreed is a price both accept. The choice usually turns on how much profit sits on the other side of the transaction and whether a treaty relationship exists that can carry the negotiation. Groups with a large, continuing flow in one direction generally find the bilateral route worth the longer process. A narrow, low-value transaction often does not justify it.
What actually happens at the pre-filing stage in India?
Pre-filing is a discussion before the formal application. The group sets out the transactions it wants covered, the method it proposes and the reasons for it, and hears how the authority sees the proposal. It is the point at which scope is settled: which transactions go in, which entity is tested, and whether the application will be unilateral or bilateral. It is also the cheapest place to discover that a proposal will not be accepted. Nothing is binding at this stage, but the record made here shapes everything that follows, so it is worth preparing the functional material properly rather than treating it as an introduction.
Do we have to file anything after the APA is signed?
Yes. An agreement is not the end of the obligation. An annual compliance report is filed for each year covered, showing that the transactions were priced as the agreement requires and that the assumptions the agreement was built on still hold. The report is what the authority uses to check the agreement is being followed, and it can be examined. Where the business has changed, because a function moved or a product line closed or a contract was renegotiated, the report is where that has to surface, since an agreement rests on the facts described in it. Groups that file the report as a formality are the ones that find the agreement questioned later.
Can the rollback apply to transactions the APA does not cover?
No. The rollback reaches specified earlier years on the same transactions the agreement covers, not the group's Indian tax position generally. If a royalty stream is in the agreement and a management charge is not, the rollback does nothing for the management charge. This matters while the application is being framed, because a transaction left out to keep the application simple is also a transaction the rollback cannot help with afterwards. We usually map every intercompany flow with the Indian entity first, decide deliberately what goes in, and record why anything is being left out.
How long does an Indian APA take to conclude?
Long enough that it is planned around rather than waited for. The application moves through pre-filing, formal filing, an analysis phase in which the authority tests the functional account and the economic analysis, and then negotiation. In a bilateral case that negotiation is between two administrations working to their own timetable. The practical consequence is that returns continue to be filed and documentation continues to be prepared while the application is open, on the basis the group considers correct. We would rather set that expectation at the start than have a group treat the application as a substitute for compliance in the intervening years.
What is an intercompany agreement, and do we need one?
It is the contract between the related parties — who does what, who bears which risk, what is charged and on what basis. It matters because when there is no agreement, an auditor prices the transaction from the conduct they can observe rather than from the arrangement you intended, and conduct rarely tells the whole story. Signed agreements that match the invoices and the actual functions are the cheapest transfer pricing protection there is. See our transfer pricing work.
Is dividend income from Indian shares taxable for an NRI?
Yes. Dividends are taxed in the shareholder's hands, and the paying company withholds on payment to a non-resident. The treaty can reduce that withholding, but only if the documents are with the company before it pays: a tax residency certificate from your country, Form 10F, and a PAN on the register. Without them the domestic rate applies and your route back to the difference is a refund claim on an Indian return. See residency certificates and Form 10F.
