Mutual Agreement Procedure India Rules: A Guide
The Mutual Agreement Procedure or MAP enables taxpayers to resolve international tax disputes. It is a process that relies on the cooperation of tax authorities in multiple countries. In India, the MAP is governed by certain rules that lay down the various steps involved in resolving tax disputes through this process.
Here is a guide to the Mutual Agreement Procedure India Rules:
1. Eligibility: The MAP can be initiated by a taxpayer who is resident in India and is subject to tax in another country with which India has entered into a tax treaty.
2. Request for MAP: The taxpayer is required to submit a request in writing to the Competent Authority of India, explaining the nature of the dispute and the relief sought. The request should be filed within three years from the first notification of the action that gives rise to the dispute.
3. Competent Authority: The Competent Authority in India is the Director-General of Income Tax (International Taxation) or any other officer designated by the Central Government. The Competent Authority is responsible for determining whether the request meets the eligibility criteria and for forwarding it to the Competent Authority of the other country.
4. Consultation: Once the Competent Authority of the other country receives the request, it shall initiate consultation with India to resolve the dispute. The Competent Authorities shall endeavour to resolve the dispute within two years from the date of receipt of the request. However, if the dispute cannot be resolved within two years, the Competent Authorities may agree to extend the time limit.
5. Agreement: If the Competent Authorities reach an agreement, it shall be communicated to the taxpayer. The taxpayer can accept or reject the agreement within 30 days of receipt of the communication. If the agreement is accepted, it shall be implemented by the tax authorities of both countries.
6. Non-Agreement: If the Competent Authorities are unable to reach an agreement, the taxpayer may initiate appropriate judicial proceedings in India or the other country or both, as per the provisions of the relevant tax treaty.
In conclusion, the Mutual Agreement Procedure is an important mechanism that enables taxpayers to resolve international tax disputes. The Mutual Agreement Procedure India Rules provide a framework for resolving such disputes in a timely and efficient manner. As a taxpayer, it is important to understand these rules and seek the advice of a tax professional in case of any disputes.