The Central Board of Direct Taxes (CBDT) has achieved a milestone in FY 2023-24 with the signing of a total of 125 Advance Pricing Agreements (APAs) with taxpayers. Among these agreements, 86 are categorized as Unilateral APAs (UAPAs) while 39 are classified as Bilateral APAs (BAPAs), as confirmed in a statement released by the CBDT. This significant accomplishment marks the highest number of APA signings in a single financial year since the inception of the APA programme, reflecting a notable 31% increase compared to the previous year's 95 APAs signed.
The primary objective of the APA Scheme is to offer predictability and assurance to taxpayers involved in transfer pricing activities by specifying pricing methods and establishing the arm's length price of international transactions in advance for a period of up to five forthcoming years. Moreover, taxpayers are granted the opportunity to extend the APA benefits retroactively for four preceding years, ensuring tax certainty for a total of nine years. The recent surge in APA signings, especially in bilateral agreements, has resulted in enhanced protection against potential or actual double taxation for taxpayers.
The bilateral APAs signed by the CBDT in FY 2023-24 have further reinforced India's commitment to fostering an environment conducive to ease of doing business, particularly for multinational enterprises (MNEs) engaging in numerous cross-border transactions within their organizational entities. The collaborative effort between taxpayers and the CBDT is acknowledged in pushing forward the mission of easing business operations, with the CBDT recognizing taxpayers for their cooperative stance as equal partners in the APA programme.