Additional tax to be levied where the charitable institution ceases to exist or converts into a non-charitable organization

A new Chapter XII-EB has been introduced vide Finance Bill, 2016, laying down special provisions relating to tax on accreted income of certain trusts and institutions. 

A society or a company or a trust or an institution carrying on charitable activity may voluntarily wind up its activities and dissolve/ or merge with any other charitable or non-charitable institution. It may also convert into non-charitable organization. As per Section 11 of the Income Tax Act, 1961 ("the Act"), certain amount from prior period can be brought to tax on failure of certain conditions but as per the existing law there is no clarity on how the corpus or asset base of the trust accreted over period of time to be utilized for charitable purposes but has not been used for the said intended purpose. 

Charitable Trusts built up corpus/ wealth through exemptions and to ensure that the benefit conferred over the years by way of exemption is not misused and the intended purpose of such exemption is achieved, a specific provision has been introduced imposing a levy in the nature of an exit tax which gets attracted when the institution is converted into a non-charitable organization or gets merged with a non-charitable organization or does not transfer the assets to another charitable organization.

It is clear that the primary condition for grant of exemption is that the income derived from property held under trust is utilized for the charitable purposes and where such income could not be applied during the previous year, it has to be accumulated and invested in the modes prescribed for such purposes as per the conditions. 

As discussed above, due to this gap in law, this levy seems justifiable. 

Briefly, the elements of this chapter are as follows:

• Accreted income of the trust or institution shall be taxable on conversion of trust or institution into a form not eligible for registration under Section 12AA of the Act or on merger into an entity not having similar objects and registered under Section 12AA or on non-distribution of assets on dissolution to any charitable institution registered under Section 12AA or approved under Section 10(23C) within a period 12 months from dissolution. (accreted income shall be the amount of aggregate of total assets as reduced by the liability as on the specified date. Method of valuation has been proposed to be prescribed in rules. While calculating the accreted income, the asset and liability of the charitable organization that have been transferred to another charitable organization within specified time shall be excluded.)
• Levy is in addition to any income chargeable to tax in the hands of the entity and since the tax is a final tax, no credit can be taken by the trust or the institution or any other person. This is leviable even if there is no other income chargeable to tax in the relevant previous year. 

Simple interest @1% per month or part of it is applicable for the period of non-payment, in case there is a failure to pay tax within the prescribed time-limit. For the purpose of recovery of tax and interest, the principal officer or the trustee and the trust or the institution is deemed to be assessee in default and other provisions related to recovery of taxes shall apply. 

These amendments are said to take effect from 1st June, 2016. 

Indirect Taxes in India

Service Tax is applicable on provision of all services except the services specified in the negative list and those specifically exempted vide the mega exemption notification. The generic service tax rate is 14% which was w.e.f. 1st June, 2015. (There is an additional levy of 0.5% proposed as Swachh Bharat Cess on value of taxable services of notified services from a date to be notified). Service tax is generally payable by the service provider except in certain specified categories where the recipient is liable to pay the service tax such as manpower supply services, goods transport services, works contract services, legal services subject to prescribed conditions. In case of import of any services where the service provider is a non-resident, the service recipient in India would become liable to discharge the service tax liability on a reverse charge basis. The service tax law also provides for zero rating of services which are exported outside India. The service tax paid on the services received can be used as set-off against the liability of service tax on provision of services. The benefit of set-off is also available on excise duty which has been paid on inputs/ capital goods used by the service provider. Effective service tax rate will be increased from 14.5% to 15% from 1st June, 2016 as proposed in the Budget, 2016.

Excise duty is levied on a manufacturer or producer in respect of the commodities produced or manufactured by him. It is recoverable from the buyer of the goods. The applicable excise duty rate on the manufacture of any goods in India is based on the universally accepted HSN code assigned to the said goods. The generic excise duty rate is 12.5% (*education cess and Secondary and Higher Education cess on excise duty has been withdrawn from 1st March, 2015). The excise duty paid on raw materials used in the manufacture of finished products is available as set-off against the excise duty liability on manufacture of such finished goods, subject to satisfaction of prescribed procedures. The benefit of set-off is also available on the service tax which has been paid on services used by the manufacturer. The Central Government has provided certain excise duty incentives for units set up in specified backward areas of India. The benefits/ incentives are in the nature of full exemption from excise duty or refund of duty paid in cash after availing credit.

Customs duty is applicable on import of goods into India. It is payable by the importer of the goods and it comprises of the following elements:

• Basic Custom Duty ("BCD")
• Additional Custom Duty ("ACD") (this is levied in lieu of excise duty and is applicable on goods manufactured in India)
• Education cess
• Secondary and Higher Secondary cess
• Special Additional Duty ("SAD") [levied in lieu of Value Added Tax ("VAT") applicable on sale of goods in India)

The applicable customs duty rate on the import of any goods into India is based on the universally accepted HSN Code assigned to the said goods. The generic BCD rate is 10% at present and the effective customs duty rate (i.e.the aggregate of the above mentioned components i.e. BCD, ACD, SAD and cesses) with BCD at 10% is 29.44% (with ACD at 12.5%, SAD at 4% and cesses at 3%)

The ACD paid as part of customs duty would be available as a CENVAT credit (set-off) to the manufacturers/ service providers using the imported goods as inputs in their manufacturing/ for provision of services. The SAD paid as part of customs duty would be available as credit to the manufacturer. For a trader, this SAD is available as a cash refund (subject to the prescribed procedure) if state VAT has been paid on subsequent sales of the imported goods. However, for a service provider no credit is available of the SAD paid.

India has central and state level indirect tax levied on sale or purchase of goods. Sales transactions which involve movement of goods within the same state are subject to levy of local state Value Added Tax whereas sales which involve interstate movement of goods are subject to CST in terms of the provisions of the Central Sales Tax Act, 1956. The rate of CST is equivalent to the VAT rate prevailing in the state from the movement of goods has commenced. There is a concessional rate of 2% if the buyer issues a declaration in Form C subject to the fulfillment of specified conditions. CST paid by the buyer while procuring the goods is not available as set-off for payment against any liability and hence is a cost to the business. Research and development cess ("R&D Cess") is leviable at the rate of 5% on import of technology directly or through deputation of foreign technical personnel under a foreign collaboration. Where the importer of the technology in India is liable for payment of service tax liability under the categories of consulting engineer's services or intellectual property right service on the import of the technology then the R&D Cess paid is available as deduction from such service tax liability subject to fulfilment of the specified conditions.

Value Added Tax ("VAT") is levied on sale of goods where the movement of goods takes place within the same state. Each state has different laws for levy of VAT and Schedules of rates on various goods. It is pertinent to note that the VAT paid to vendors for procurement of goods can be availed as input tax credit against discharge of VAT or CST liability on sale of goods. Certain VAT/ CST incentives are available to units set up in specified backward areas of the states. Such incentives are in the nature of a concessional rate of VAT/ CST or in the nature of remission/ subsidy of the VAT/ CST charged. The VAT ranges from NIL to 30% across different states and is also dependent upon the nature of the goods.

Entry Tax is levied on the entry of special goods into a state for use, consumption or sales therein. The entry tax rates from state to state and are applicable only on specified goods. Certain states provide for a set-off of entry tax paid against the VAT payable on the sale of goods in such stat. Local Body Tax ("LBT")/ Octroi is levied on the entry of specified goods into a specified municipal limit/ local area for use, consumption or sale. Presently, LBT/ Octroi is levied only in certain areas of Maharashtra for dealers having a turnover above the specified limit. The LBT/ Octroi rates vary from NIL to 10% across municipal areas and are also dependent upon the against any liability and nature of the goods. No set-off of LBT/ Octroi paid is available against any liability.

Besides the taxes as mentioned above, there are certain local taxes applicable within specific areas of certain identified cities, towns, villages, etc. These are agricultural produce market cess and mandi tax, entertainment tax, luxury tax, etc. Such taxes are generally levied on the removal of goods from the specified locations or on specified activities. No set-off of such taxes paid is available. Hence, such taxes would form part of the cost of procurement. 

The Indian Indirect tax system is complex and multi-layered which is levied on both central and state level. In order to reduce such complexities and streamlining various indirect taxes, reducing taxes and compliances, India has proposed to implement Goods and Services Tax ("GST"). It is contemplated that there would be a dual GST structure comprising of the CGST to be levied by the centre and SGST to be levied by the states. Integrated GST, which is a combination of CGST, would be applicable on all inter-state transactions of goods and services and would be levied by the Central Government, Interstate stock transfers would be treated at par with interstate sales for the levy of GST. The proposed framework of GST is as under:

• GST is a broad-based and destination based consumption tax on supply of goods and services
• Taxable event for GST would be supply of goods and services and therefore would no longer be manufacture of sale of goods

GST proposes to subsume the following taxes:

1. Central taxes - Excise duty, CST, ACD, SAD, Service tax, surcharge, cesses, etc.
2. State taxes - VAT, luxury tax, state cesses and surcharges, entry tax, etc.
3. Basic customs duty on imports would not be subsumed with GST
4. Additional 1% tax on inter-state supply of goods
5. Petroleum products, viz. crude petroleum, diesel, aviation turbine fuel and natural gas have been temporarily kept out of the ambit of GST
6. Alcohol for human consumption, tobacco and tobacco products are also excluded from gamut of GST levy
7. Varying tax rates have been proposed, however, no final consensus achieved yet

Brief overview of Direct Taxes in India

Direct Taxes

India follows a residence-based taxation system. Taxpayers in India are classified as residents or non-residents. A resident individual taxpayer is further categorized as "ordinary resident" or "not ordinarily resident." An "ordinary resident" is taxed on his global income and on the other hand "non-resident" and "not ordinarily resident" is taxed on income received/ accrued or deemed to be received/ accrued in India. Taxable income is computed for a particular "tax year". 

A "tax year" means a financial year ("FY") which runs from 1st April to 31st March of the following calendar year. Any income pertaining to the tax year (i.e. "previous Year") is offered to tax in the following year (i.e. "Assessment Year"). Global income of domestic companies, partnerships and other local authorities is subject to tax at flat rates whereas individuals and other specified taxpayers are subject to progressive tax rates. Foreign companies and Non Resident Indians ("NRI") are subject to tax at varying rates on specified income which is received or accrues/ arises or deemed to be received or deemed to accrue/ arise in India.

Individual	Company
An individual is classified as an “ordinary resident", a “non-resident” or a “not ordinarily resident”, depending upon the period of physical stay in India during a tax year (preceding ten tax years)	A company is resident in India in any previous year, if it is an Indian company, formed and registered under the Companies Act (“Companies Act, 1956” & "Companies Act, 2013”)

Types of Taxes:

Corporate tax: 

A Resident Company is taxed on its global income. Income tax is levied @30% on the income earned during a tax year. Surcharge and education cess are also levied in addition to the Corporate Income Tax. In case the income tax payable is is less than the Minimum Alternate Tax ("MAT") calculated, the Book Profit will be deemed to be the total income and MAT will be levied. It is applicable to all the companies including foreign companies (except those foreign companies which do not have Permanent Establishment or Place of Business). The company is required to pay MAT @18.5% on the adjusted book profits. Surcharge and education cess are also levied. [Book profit is the net profit as shown in the Profit and loss Account for the relevant financial year, subject to certain adjustments.]

Hence, every company has to compute its income tax liability as per two sets of provisions and the set of provisions that results in higher income tax liability become the income tax payable.

  Income Tax Rate Chart for the Corporates:

SL No.	Particulars	Tax (%)	Surcharge (%)	E. Cess (%)	SHE. Cess (%)	Effective tax (%)
1.	Domestic Companies with total income less than 1 crore	30	NIL	2	1	30.90
2.	Domestic Companies with total income more than one crore but less than 1 crore	30	7	2	1	33.063
3.	Other domestic companies	30	12	2	1	34.608
4.	Foreign companies with total income more than 1 crore but less than 10 crore	40	2	2	1	42.024
5.	Other foreign companies	40	5	2	1	43.26

Minimum Alternate Tax

SL No.	Particulars	Tax (%)	Surcharge (%)	E. Cess (%)	SHE. Cess (%)	Effective tax (%)
1	Domestic Companies with total income less than 1 crore	18.5	NIL	2	1	19.055
2	Domestic Companies with total income more than one crore but less than 1 crore	18.5	7	2	1	20.389
3	Other domestic companies	18.5	12	2	1	21.342
4	Foreign companies with total income less than 1 crore	18.5	NIL	2	1	19.06

• Purchase/ sale of supply of equity shares, a unit of a business trusts or units of equity oriented mutual fund

• Sale of unlisted units of business trust under an initial offer

• Sale of options and futures in securities

Any income accruing or arising to any foreign company by way of capital gains from transactions in securities, interest, royalty or fees for technical services is excluded from the ambit of MAT. A domestic company pays Dividend Distribution Tax ("DDT") @15% (surcharge and education cess is also levied) on the dividend declared, distributed or paid. 

Dividend declared by a domestic company must be grossed up for applying DDT, resulting in an effective rate of 20.925%. including surcharge and education cess. Indian company receiving dividend from foreign company is levied @15%. Surcharge and education cess is also levied provided it holds at least 26% in the nominal value of equity share capital of the foreign company. An additional income tax @20% is levied on specified distributed income by unlisted domestic companies on buy-back of shares from its shareholders.

Capital Gains

Profit arising from the transfer of capital asset is liable to be taxed as Capital gains. Capital assets include all kinds of property except stock-in-trade, raw materials and consumables used in business or profession, personal effects (except jewellery), agricultural land and notified gold bonds. Long Term Capital Gain ("LTCG") arising from assets held for 36 months or more (12 months in case of certain specified capital assets) are eligible for indexation benefit and are taxed at special rates/ eligible for certain exemptions (including exemption from tax where the sale transaction is chargeable to STT).

Short Term Capital Gain ("STCG") arising from the transfer of equity share in a company and unit of an equity-oriented mutual fund is subject to Securities Transaction Tax ("STT") and is taxable @15%. Other short-term capital gains are generally taxed at the applicable rates. Securities Transaction Tax is levied on the value of taxable securities transactions at specified rates. Securities Transaction Tax is levied on the value of taxable securities transactions at specified rates. The taxable securities transactions are:

Commodity transaction tax ("CTT') is levied on the sale of a commodity derivative other than agricultural commodities traded in recognized associations @0.01% on the value of such transaction. 

Tonnage Tax scheme or taxation ("TTS") - Tax is evied on the notional income of the Indian Shipping company arising from the operation of ships at normal corporate tax rates. Such income is determined in a prescribed manner on the basis of the tonnage of the ship. Shipping companies can opt for the Tonnage Tax scheme or taxation under normal provisions. Once opted for, it would apply for a mandatory period of 10 years and other tax provisions would not apply.

Wealth Tax has been abolished from the Financial year 2015-16 onwards.

Modes of taxation - Gross basis of taxation

Interest and royalties/ Fee for Technical services ("FTS") earned by non-residents are liable to be taxed on a gross basis @20% and 10% respectively unless effectively connected to a permanent Establishment. However, Double Taxation Agreement ("DTAA") protection may be available. Surcharge and education cess are also levied. 

Presumptive basis of taxation 

As per Section 44AA, a person engaged in the business is required to maintain books of accounts under any circumstances. To give relief to small tax payers from this tedious work the Act has framed the presumptive taxation scheme under Section 44AD and 44AE. The scheme can be adopted by Resident Individual, Resident Hindu Undivided Family, Resident Partnership Firm (not Limited Liability Partnership Firm). This Scheme cannot be adopted by Non-resident and by a person who has made claim towards deductions under Section 10A, 10AA, 10B, 10BA or under Section 80HH to 80RRB in the relevant year. The provisions of allowance/ disallowances as provided under Income Tax Law will not apply and income computed under presumptive rate of 8% will be the final taxable income of the business covered under presumptive taxation scheme and no further expenses will be allowed or disallowed. 

Presumptive taxation scheme has been now extended (with profit deemed to be 50%) to professionals with gross receipt of up to Rs. 50 lakh.

Withholding of taxes

Income payable to residents or non-residents are subject to withholding tax by the payer. In most cases, individuals are not obliged to withhold tax on payments made by them. 

Carry forward of losses and unabsorbed depreciation

Business loss (including that of speculation business), unabsorbed depreciation, and capital loss (long-term as well as short-term) can be carried forward and set off as per the prescribed provisions of the law. Business losses can be carried forward for a period of eight years, whereas unabsorbed depreciation can be carried forward infinitely. Loss from speculation business can be set off only against profits from the business of speculation. In certain circumstances, business of trading in shares is deemed to be speculation business. However, a taxpayer with the business of trading in shares shall not be deemed to be carrying on a speculation business. 

Corporate reorganizations

Amalgamations and demergers are either tax neutral or taxed at concessional rates subject to the fulfilment of the prescribed conditions. Capital gain will be exempt in respect of indirect transfers by way of overseas amalgamations and de-mergers involving any transfer of a capital asset being a share of a foreign company which derives directly or indirectly, value as stipulated from share (s) of an Indian company.

Relief from Double Taxation

India has entered into DTAA with more than 9 countries. The provisions of DTAA prevail over the domestic tax provisions. However, the domestic tax provisions may apply to the extent they are more beneficial to the taxpayer. The benefit of the DTAA will not be available unless a taxpayer obtains a Tax Residency Certificate ("TRC") from the government of the country where the taxpayer resides. India has also entered into Tax Information Exchange Agreements ("TIEA") with several countries and specified territories outside India, e.g. British Virgin Islands, Cayman Islands, etc.

Authority for Advance Rulings ("AAR")

It is available to an applicant with respect to any question of law or fact in relation to the tax liability of the non-resident, arising out of a transaction undertaken or proposed to be undertaken. Such scheme of AAR is also available to resident taxpayers in relation to a tax liability arising out of a transaction undertaken or to be undertaken. The advance rulings are binding on the tax authorities as well as the applicant with respect to the transaction for which the ruling has been sought. However, they can be challenged before the High Court. Advance rulings help non-residents and residents in planning their income tax affairs well in advance and bring certainty in determination of income tax liability.

Anti-avoidance measures

GAAR has been introduced under the Indian domestic law. The applicability of the GAAR provisions has been deferred by two years and is effective from financial year 2017-18. It has been clarified that GAAR will be applicable to investments on or after 1st April, 2017. Under GAAR, an arrangement is to be treated as an impermissible avoidance arrangement if the main purpose is to obtain tax benefit and amongst other instances it lacks/ deems to lack commercial substance. 

Indirect transfer provisions

Indirect transfer of shares by a foreign company held in another foreign company which derives its value substantially from Indian assets is taxable in India on proportionate basis, if on the specified date (date of transfer or last day of accounting year as stipulated) the value of such Indian assets exceeds USD 1.60 million, and it represents at least 50% of the value of all the assets owned by the foreign company or entity. No income shall be deemed to accrue or arise to a non-resident from transfer, outside India, of any share of, or interest in, a company or an entity, registered or incorporated outside India, if the transferor whether individually or along with its associated enterprises:

• neither holds the right of control or management;

• nor holds voting power or share capital or interest exceeding 5% of the total voting power or total share capital in the foreign company or entity directly holding the Indian assets (direct holding company)

• neither holds the right of management or control in relation to such company or the entity

• nor holds any rights in such company which would entitle it to either exercise control or management of the direct holding company or entity it to voting power exceeding 5% in the direct holding company or entity.

Tax incentives

The above criteria for exemption apply where such company or entity directly owns the assets situated in India. If such company or entity indirectly owns the assets situated in India then exemption shall be available if the transferor (whether individually or along with its associated enterprises), at any time in the 12 months preceding the date of transfer:

• Generation or generation and distribution of power - begins to generate power on or before 31st March, 2017

• Transmission or distribution by laying a network of new transmission or distribution line - starts transmission or distribution by laying a network of new transmission or distribution lines on or before 31st March, 2017

• Substantial renovation and modernization (more than 50%) of the existing network of transmission or distribution lines - on or before 31st March, 2017

Special economic zones

The SEZ scheme is administered by the Ministry of Commerce through the board of approvals (at the central level) and through the regional development commissioner (at state level). The Scheme is operated through the SEZ Act, 2005 and SEZ Rules, 2006

An enterprise which sets up a unit in SEZ for undertaking export activities is entitled to claim tax holiday with respect to its export profits for a period of 15 years commencing from the year in which such unit begins to manufacture or produce articles or things or provide services. The unit is eligible for tax holiday subject to satisfaction or prescribed anti-abuse provisions. The profits earned by SEZ unit would be subject to MAT provisions.

Special economic zone developer

100% tax holiday on profits and gains derived from the business of developing, maintaining and operating SEZ for 10 consecutive years out of 15 years, commencing from the notification of SEZ, has been provided. However, MAT and DDT provisions are applicable to the SEZ developers.

Offshore banking units and international financial services centre units set-up in special economic zone

Tax holidays on 100% of the income for the first 5 years (commencing from the year in which permission to set up OBU or IFSC is obtained), and 50% for the next 5 consecutive years. MAT and DDT provisions are applicable to these units.

In-house research and development

A weighted deduction @200% on the scientific research expenditure incurred (excluding expenditure on the cost of land or buildings) on an in-house research and development facility is allowed as a deduction while computing the income of a taxpayer which is engaged in the business of manufacture or production of any article or things other than prohibited article or thing.

Infrastructure projects

Tax holiday on the basis of profits derived for a consecutive period of any 10 years out of a block period of 15/20 years.

Power projects

Tax holiday for a period of 10 years in a block of 15 years is unavailable to undertakings on the profits derived from the following activities:

Transfer pricing in India

Transfer Pricing Regulations through the Finance Act, 2001, were made effective from the financial year ending March 2002. These provisions were set to be governed by the Income Tax Act, 1961, and are based on the Transfer Pricing guidelines of the Organization for Economic Co-Operation and Development.

The Transfer Pricing Laws have been enumerated under Sections 92 to 92F of the Indian Income Tax Act and cover intra-group cross-border transactions. Rules and regulations prescribe that income arising from International Transactions or Specified Domestic Transactions between Associated Enterprises ("AE") should be computed using the arm’s-length price principle. The following methods are prescribed under the Act for the determination of the arm’s-length price:

• Comparable uncontrolled price (CUP) method;

• Resale price method (RPM);

• Cost plus method (CPM);

• Profit split method (PSM);

• Transactional net margin method (TNMM);

• Such other methods as may be prescribed.

• Any expenditure with respect to which deduction is claimed while computing profits and gains of business or profession;

• Any transaction related to businesses eligible for profit-linked tax incentives, (e.g. infrastructure facilities, under Section 80-IA, and SEZ units, under section 10AA);

• Any other transactions as may be specified.

• purchase, sale or lease of tangible or intangible property; or

• provision of services; or

• lending or borrowing money

The amendment was made applicable from fiscal year 2012-13 and onwards. Income arising from an international transaction is a pre-condition for application of transfer pricing provisions.  "International transaction" means a transaction between two or more AE's, either or both of whom are non-residents, in the nature of the following: 

The Finance Act, 2012 extended the application of transfer pricing regulations to domestic transactions termed under "Specified Domestic transactions".The following transactions with related domestic parties qualify as Specified Domestic Transactions, provided the aggregate value of such transactions exceed INR 5 crore: 

Any other transaction having a bearing on the profits, income, losses or assets of such enterprises, and shall include a mutual agreement or arrangement between two or more AEs for the allocation or apportionment of, or any contribution to, any cost or expense incurred or to be incurred in connection with a benefit, service or facility provided or to be provided to any one or more of such enterprises. 

Transactions between the taxpayer and any independent resident or non-resident persons (collectively known as "other person") would be deemed to be an international transaction and would come under the purview of Indian transfer pricing regulations, if there exists a prior agreement between the AE and the other person or the terms of the transaction under consideration are determined in substance by the AE and the other person.

In order to reduce transfer pricing litigation, the Indian tax authorities had announced the Safe Harbour Rules ("SHR") in September 2013, applicable for a period of 5 years starting with Assessment year 2013-14 for various sectors. Rules are the minimum profitability or pricing thresholds, which if met for specified categories of international transactions with AEs, could provide immunity to taxpayers from transfer pricing audits. The rules provide for a time bound procedure for determination of the eligibility of the taxpayer and of the international transactions for safe harbours. 

Advance Pricing provisions were introduced in the Indian transfer pricing regulations w.e.f. 1st July, 2012. Advance Pricing Agreements ("APA") refers to an agreement between the taxpayer and the tax authorities on the pricing of an existing or proposed transaction between related parties. APA "rollback mechanism" was introduced in 2014 in the existing APA programme w.e.f. 1st October, 2014. Rollback of APAs can now enable the taxpayers to apply the transfer prices agreed upon in an APA to be rolled back for a period not exceeding 4 previous years, preceding the first year for which the APA is signed. The rollback provisions provide for determining the ALP or the manner in which it shall be determined in relation to international transactions entered into by the taxpayer. Rollback application is required to be filed along with the main APA application and can cover only those international transactions which are proposed to be covered under the main APA application. Taxpayer as well as the revenue authorities would be required to withdraw the pending appeals in respect of the covered transactions. 

The taxpayers can choose Mutual agreement procedure ("MAP") to resolve bilateral international tax/ transfer pricing disputes with certain foreign jurisdictions depending on the provisions in the relevant DTAAs.