While the tax cuts that have been carried out are welcome, on the more vital front of providing tax certainty, India is not only a straggler but has actually been slipping. The Advance Pricing Authority (APA) on matters related to transfer pricing, and the Authority for Advance Rulings (AAR), which tells those who seek clarity on their eligibility for availing of various tax-planning opportunities and arrive at the tax rate applicable to them, are admirable bodies meant to provide tax certainty. If the ruling is at variance with the applicant’s expectation and the tax paid as per that expectation, interest and penalty would accrue. To make advance pricing, a certain expertise is required, particularly familiarity with tax treaties and their working. Plan human resources — skill acquisition and training, along with transfer and promotions — to ensure APA and AAR are adequately staffed at any point of time.

Source: Economic Times January 01, 2020 16:52 UTC