Status of India’s Advanced Pricing Agreement Program- 95 APAs Signed in FY23 Offering Tax Certainty ( November 29, 2023 )

The Advanced Pricing Agreements in India address complex transfer pricing issues, mitigating the need for litigation and align with India's objective of enhancing the ease of doing business.

India’s tax department, the Central Board of Direct Taxes (CBDT), released the fifth annual Advanced Pricing Agreement (APA) report in early September. The report provides essential data and statistics related to the APA program, covering aspects such as the distribution of applicants across sectors, the nature of transactions addressed, and the transfer pricing methodologies employed.

• The fifth report offers an update on the status of applications filed until March 31, 2023, with statistics reflecting developments up to the Financial Year (FY) 2022-23. This period saw the CBDT recording the highest number of APA signings in any fiscal year since the inception of the program, with a total of 95 APAs.
• The CBDT also entered into 32 Bilateral Advance Pricing Agreements (BAPAs) in FY23, marking the highest number of BAPAs in any financial year to date. This figure represents a notable increase, more than doubling the previous record of 13 BAPAs signed in a single fiscal year.
• The APA report provides insights into the country-wise distribution of these advanced pricing agreements, highlighting engagements with tax treaty partners such as Finland, the UK, the US, Denmark, Singapore, and Japan. This reflects the growing maturity of India's relationships with various treaty partners.
• India also recorded the largest number of APA signings in a single day, with a total of 21 APAs signed on March 24, 2023. Rounding up other key milestones, FY23 saw the signing of the 400th Unilateral Advance Pricing Agreement (UAPA) and the 500th APA.
• So far India has filed a total of 516 APAs bringing finality in taxation to income of about INR 190 billion (US$2.28 billion). This, per the CBDT, translates to a payment of about INR 70 billion (US$840 million).