The Central Board of Direct Taxes (CBDT) has signed a record 219 Advance Pricing Agreements (APAs) with Indian taxpayers in FY 2025-26. This is the highest ever APA signings in any single financial year since the launch of the APA programme.
With this achievement, the cumulative total of APAs since inception has crossed the 1,000th mark, reaching 1,034 APAs- comprising 750 Unilateral APAs (UAPAs) and 284 Bilateral APAs (BAPAs).
| Total APAs Signed (FY 2025–26) | 219 |
|---|---|
| Types of APAs | Includes Unilateral APAs (UAPAs) and Bilateral APAs (BAPAs) |
| Cumulative APAs (Since Inception) | 1034 |
| Break-up: | 750 UAPAs; 284 BAPAs |
| BAPAs Signed (FY 2025–26) | 84 (highest ever) |
| Previous Record (BAPAs) | 65 in FY 2024–25 |
| Treaty Partners Involved | USA, Finland, UK, Singapore, Japan, South Korea, Australia, Denmark, Sweden, France, Indonesia, Ireland, New Zealand |
| First-time BAPAs with Countries | France, Ireland, Indonesia, Sweden |
| APAs Signed (FY 2024–25) | 174 |
| APAs Signed (FY 2023–24) | 125 |
| Trend Analysis | Consistent growth in APA signings over the years |
| Significance | Reflects strong adoption of APA mechanism by taxpayers |
What is an APA (Advance Pricing Agreement)?
- An APA is an agreement between a taxpayer and the tax authority (CBDT) that determines the transfer pricing methodology and arm’s length price of international transactions in advance- typically for up to five years.
- It provides certainty and predictability to multinational companies on their tax positions, reducing disputes.
Types of APAs
Unilateral APA (UAPA)
- Involves only one tax authority — in this case, CBDT and the taxpayer.
- Faster to conclude but does not protect against double taxation by the other country.
Bilateral APA (BAPA)
- Involves two tax authorities — CBDT and the tax authority of the treaty partner country.
- Concluded through Mutual Agreement Procedure (MAP).
- Offers the added benefit of protection against double taxation, making it more comprehensive.
Safe Harbour Rules- Complementing the APA Framework
What are Safe Harbour Rules?
- Introduced in 2013, Safe Harbour Rules offer a faster and lower-cost alternative to APAs for achieving transfer pricing certainty.
- They prescribe fixed margins for specified categories of international transactions, reducing the need for detailed case-by-case analysis.
- This regime currently spans twelve transaction categories, including IT and software services, IT-enabled services, KPO, contract R&D, intra-group financing, guarantees, auto components, low value-adding services, and certain transactions in the diamond industry.
Finance Act 2026 — Key Enhancements to Safe Harbour Rules
The Finance Act 2026 has introduced significant upgrades to strengthen the Safe Harbour framework:
- IT Services Consolidation: Multiple technology service segments have been consolidated into a single “Information Technology Services” category with a uniform 15.5% margin.
- Eligibility threshold: Increased from Rs. 300 crore to Rs. 2,000 crore.
- Automated Framework: More system-driven and automated framework introduced, reducing the need for detailed scrutiny and administrative interface.