Advance pricing agreements: CBDT signs 219 APAs, taking India total past 1,000

The Income Tax Department signed 219 advance pricing agreements with Indian taxpayers this fiscal year. The Central Board of Direct Taxes said the aim was to support tax certainty. The agreements included Unilateral APAs and Bilateral APAs. CBDT said the number was the highest annual total since the programme began.

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With the latest signings, the overall count since the APA programme started reached 1,034. CBDT said this total included 750 Unilateral APAs and 284 Bilateral APAs. The latest annual figure took the programme beyond the 1,000 mark. Officials said the approach was used to make compliance more predictable.

Advance pricing agreements APA cross 1,000 as CBDT signs record deals

CBDT said 84 Bilateral APAs were signed this year. That was higher than the 65 Bilateral APAs signed in FY 2024-25. CBDT said Bilateral APAs were concluded after mutual agreements with 13 of India’s treaty partners. The partners included the US, Finland, the UK, and Singapore.

CBDT said the remaining treaty partners were Japan, South Korea, Australia, Denmark, Sweden, and France. The list also included Indonesia, Ireland, and New Zealand. CBDT said the year also saw India’s first bilateral APAs with France, Ireland, Indonesia and Sweden. Officials linked this to ongoing talks under tax treaties.

CBDT highlights bilateral APA growth with 13 treaty partners

CBDT said APA signings stayed high in recent years. The department concluded 174 APAs in the previous financial year. It signed 125 APAs in the year before that. CBDT said the new record continued this trend. The statement described the process as supporting certainty for cross-border pricing disputes.

CBDT said Safe Harbour Rules worked alongside the APA framework. The statement said these rules offered a faster and lower-cost route to transfer pricing certainty. Introduced in 2013, the framework set fixed margins for selected international transactions. CBDT said this helped reduce disputes for eligible taxpayers.

Safe Harbour Rules for APA offer faster transfer pricing certainty

CBDT said the Safe Harbour regime covered twelve transaction categories. These included IT and software services, IT-enabled services, and KPO work. Other areas were contract R&D, intra-group financing, and guarantees. The list also covered auto components, low value-adding services, and some diamond industry transactions.

CBDT said the Finance Act 2026 changed the Safe Harbour Rules. Several technology service segments were merged into one Information Technology Services category. CBDT said this category used a uniform 15.5 per cent margin. The eligibility threshold rose from Rs 300 crore to Rs 2,000 crore.

CBDT said the amendments added a more system-driven and automated process. The statement said this reduced the need for detailed scrutiny. CBDT also said it cut the administrative interface during assessments. The department linked the changes to simpler processes for taxpayers using Safe Harbour Rules.

CBDT said the APA Scheme and Safe Harbour Rules together set methods in advance. They also determine the arms length price for international transactions for up to five years. CBDT said Bilateral APAs also protected against potential or actual double taxation. The board said it valued taxpayers’ cooperation in running the programme.

With inputs from PTI