CBDT issued MAP guidance for the benefit of taxpayers, tax practitioners, tax authorities, and CAs of India and of treaty partners
Mutual Agreement Procedure (MAP) is an alternate tax dispute resolution mechanism available to the taxpayers under the DTAAs for resolving disputes giving rise to double taxation or taxation not in accordance with DTAAs. MAP can help in relieving double taxation either fully or partially. Almost all DTAAs entered into by India have the MAP Article and it provides an additional dispute resolution mechanism to taxpayers in addition to those available under the domestic laws of India. A taxpayer can request for assistance under MAP regardless of the remedies provided under the Indian domestic law.
India has a large network of Double Taxation Avoidance Agreements (‘DTAAs’ or ‘Tax Treaties’, hereinafter) with various countries. The DTAAs, inter- alia, provide rules and mechanisms for allocation of taxing rights amongst the treaty partners; avoidance of economic and juridical double taxation; and resolution of taxation not in accordance with the treaty through the Mutual Agreement Procedure (‘MAP’, hereinafter).
Rule 44G of the Income-tax Rules, 1962 has been notified recently vide G.S.R.282 (E) dated 6thMay, 2020. This rule substitutes the previous rules 44G and 44H, which dealt with the same issue of implementation of MAP. The rule provides, inter-alia, the processes to be followed by the competent authority(ies) (‘CA’ or ‘CAs’ hereinafter)of India till the resolution of the issue of taxation not in accordance with the treaty and the processes to be followed by the field authorities to implement the outcome of the MAP. The new rule is applicable w.e.f 6th May, 2020 and, accordingly, applies to all MAP cases pending with the CAs of India as on 6th May, 2020.
Though erstwhile rules 44G and 44H were in existence for a number of years, detailed information regarding MAP processes and guidance on issues related to such processes were not available in a comprehensive and consolidated manner.
The Action 14 final report on “Making Dispute Resolution More Effective”, of the Base Erosion and Profit Shifting (‘BEPS’, hereinafter) project of the G-20 and OECD countries, had recommended that all countries that implement the BEPS package of measures must publish comprehensive MAP guidance.
In view of the above, the Board has decided to issue this MAP guidance for the benefit of taxpayers, tax practitioners, tax authorities, and CAs of India and of treaty partners.
The MAP guidance is presented in the following four parts:
Part A: Introduction and Basic Information;
Part B: Access and Denial of Access to MAP;
Part C: Technical Issues; and
Part D: Implementation of MAP outcomes.
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