THEBUSINESSBYTES BUREAU

NEW DELHI, MARCH 31, 2026

In a landmark achievement reinforcing India’s reputation as a predictable and investor-friendly tax jurisdiction, the Central Board of Direct Taxes (CBDT) has signed a record 219 Advance Pricing Agreements (APAs) during FY 2025–26, taking the cumulative total to 1,034 APAs since the programme’s inception. The milestone underscores the growing confidence of global and domestic businesses in India’s transparent transfer pricing framework.

The FY26 tally comprises 750 Unilateral APAs (UAPAs) and 284 Bilateral APAs (BAPAs), with the latter witnessing remarkable momentum. CBDT concluded 84 BAPAs during the year — the highest ever in a single financial year — surpassing the previous record of 65 BAPAs signed in FY 2024–25. These bilateral agreements were finalised through Mutual Agreement Procedures with 13 key treaty partners, including the United States, United Kingdom, Japan, Singapore, Australia, France, Ireland, Indonesia and Sweden. Significantly, FY26 marked India’s first-ever bilateral APAs with France, Ireland, Indonesia and Sweden, reflecting expanding global cooperation on tax certainty.

The steady rise in APA signings highlights the effectiveness of India’s proactive tax administration strategy. In the previous two financial years, CBDT had concluded 174 APAs in FY25 and 125 APAs in FY24, demonstrating sustained progress in dispute prevention and tax certainty mechanisms.

Complementing the APA framework, the Safe Harbour Rules continue to provide a simplified and cost-effective pathway for businesses to achieve transfer pricing certainty. Introduced in 2013, the regime specifies predefined profit margins for selected international transactions across sectors such as IT services, IT-enabled services, knowledge process outsourcing (KPO), contract research and development, intra-group financing, corporate guarantees, auto components manufacturing, low value-adding services and segments of the diamond industry.

The Finance Act 2026 has further strengthened the Safe Harbour framework through structural reforms aimed at simplifying compliance. Multiple technology service categories have now been consolidated into a single “Information Technology Services” segment with a uniform margin of 15.5%, while the eligibility threshold has been significantly expanded from ₹300 crore to ₹2,000 crore. The updated framework also introduces a more automated and system-driven approach, reducing administrative complexity and enhancing ease of doing business.

Together, the APA Scheme and Safe Harbour Rules provide companies with advance clarity on pricing methodologies and arm’s length values for cross-border transactions for up to five years, thereby reducing litigation risks and improving investment confidence. Bilateral APAs, in particular, offer protection from potential double taxation, making them a preferred route for multinational enterprises operating across jurisdictions.

CBDT has acknowledged the constructive engagement of taxpayers and stakeholders, emphasising that collaborative participation continues to play a pivotal role in strengthening India’s tax certainty ecosystem and fostering a stable environment for cross-border trade and investment.