India: Tax relief, computation when book profit increase due to APA or secondary adjustments

CBDT notice provides a formula for reducing the amount of tax payable.

Due to APA or secondary adjustments

The Central Board of Direct Taxes (CBDT) issued a notice—CBDT Notification 92/2021 (10 August 2021)—prescribing a new rule for computing tax relief when there is an increase in book profit as a result of advance pricing agreement (APA) adjustments or secondary adjustments.

The Finance Act, 2021 introduced a new set of provisions for computing the minimum alternative tax and specifically addressing when there is an increase in book profit of the previous year due to income of past year(s) being included because of an APA entered into by the taxpayer or a required secondary adjustment.

The CBDT notice provides a formula for reducing the amount of tax payable. This approach provides that the minimum alternative tax payable on income for the previous year (for which a transfer pricing adjustment is made in the books of account) does not exceed the minimum alternative tax payable on book profits for the prior years, after taking into account and including the transfer pricing adjustment.
 

Read an August 2021 report [PDF 345 KB] prepared by the KPMG member firm in India

 

 

The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organization. KPMG International Limited is a private English company limited by guarantee and does not provide services to clients. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. For more information, contact KPMG's Federal Tax Legislative and Regulatory Services Group at: + 1 202 533 4366, 1801 K Street NW, Washington, DC 20006.