Recently, the Central Board of Direct Taxes (CBDT) signed a record 125 Advance Pricing Agreement (APAs) in FY 2023-24 with Indian taxpayers. 

Key highlights:

  • This marks the highest-ever APAs signings in any financial year since the launch of the APA program.
  • This includes 86 Unilateral APAs (UAPAs) and 39 Bilateral APAs (BAPAs).
  • The number of APAs signed in FY 2023-24 represents a 31% increase compared to the previous financial year, with 95 APAs signed.
  • With the latest signings, the total number of APAs since the inception of the program has reached 641, including 506 UAPAs and 135 BAPAs.
  • FY 2023-24 also witnessed the signing of the maximum number of BAPAs in any financial year till date. These BAPAs were signed as a consequence of entering into Mutual Agreements with India’s treaty partners, including Australia, Canada, Denmark, Japan, Singapore, the UK, and the US.

About Advance Pricing Agreement (APA) 

  • It is an agreement between a taxpayer (company) and a tax authority (government) that determines the transfer pricing methodology to decide the pricing of future international transactions of the taxpayer. 
  • Once the APA is sealed, the methodology decided upon is applied for a certain period of time base on completion of certain terms and conditions.
  • The OECD, along with other international bodies, started to develop guidelines and recommendations for transfer pricing, leading to the formal introduction of APAs as a tool for tax authorities and taxpayers to proactively address transfer pricing issues.

India and APA:

  • It was introduced in India through the Finance Act of 2012 to attract foreign investment and streamline tax procedures.
  • The CBDT is responsible for administering the APA program in India.
  • In India this applies for up to five years into the future. Additionally, taxpayers can choose to apply the agreed pricing retrospectively for up to four previous years. This means that taxpayers can have certainty about their taxes for a total of nine years, both in the past and in the future.


  • The APA establishes a pricing method for goods and services transferred between affiliated companies in different countries.
  • This ensures arm’s length pricing, meaning the prices are similar to what unrelated companies would charge each other in similar transactions.

Types of APAs:

  • Unilateral APA: Involves only the taxpayer company and tax authority of the country where the company is located.
  • Bilateral APA: Involved Four entities:
  • The taxpayer in their home country.
  • The tax authority of the taxpayer’s location.
  • The associated enterprise (AE) of the taxpayer in a foreign country.
  • The tax authority of the country where the AE is located.
  • The signing of bilateral APAs additionally provides the taxpayers with protection from any anticipated or actual double taxation.

Multilateral APA:  Involved Multiple entities:

  • The taxpayer in their home country.
  • The tax authority of the taxpayer’s company.
  • Two or more associated enterprises (AEs) of the taxpayer.
  • The respective tax authorities of the countries where these AEs operate.


  • Reduced Tax Disputes: Minimizes disagreements between companies and tax authorities over transfer pricing.
  • Ease of Doing Business: Provides companies with a clear understanding of their tax liabilities for international transactions, preventing tax evasion by multinational corporations (MNCs).
  • Enhanced Transparency: Promotes fair and transparent pricing practices for international transactions.
  • Protection Against Double Taxation: Bilateral APAs offer an essential benefit: protection from anticipated or actual double taxation. When dealing with cross-border transactions, this safeguard ensures that taxpayers are not unfairly taxed by multiple jurisdictions.

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