The Central Board of Direct Taxes (CBDT) has recently released the fourth and fifth annual Advance Pricing Agreement (APA) reports. The reports present key data and statistics pertaining to the APA programme. These include sectoral distribution of applicants, nature of transactions covered, transfer pricing methodologies applied etc.

The fifth report includes status of applications filed till 31st March, 2023. The statistics are updated till Financial Year (FY) 2022-23, for the present. The report highlights various achievements of the APA programme in FY 2022-23. 

The APA programme of the CBDT is one of its foremost initiatives for promoting an investor-friendly and non-adversarial tax regime in India. 

Since its inception in 2012, the Indian APA programme has contributed significantly to the Government of India’s mission of promoting ease of doing business.

The APA is one of its foremost initiatives for promoting an investor-friendly and non-adversarial tax regime in India.

In FY 2022-23, CBDT recorded the highest ever APA signings in any financial year since the launch of the APA programme, signing a total of 95 APAs.

CBDT also signed 32 Bilateral Advance Pricing Agreements (BAPAs) in FY 2022-23 being the maximum number of BAPAs in any financial year till date. 

A record of the largest number of single day signings in the history of the programme was also created with a total of 21 APAs signed on 24th March, 2023. 

Additionally, signing of the 400th Unilateral Advance Pricing Agreement (UAPA) and the 500th APA were also milestones achieved in this year. 

What is an Advance Pricing Agreement (APA)?

• An APA is an agreement between a taxpayer and the tax authority on the pricing of future. 
• APA is an effective tool used in several countries with established transfer pricing regimes to avoid potential disputes in a cooperative manner
• In India the APA was introduced in 2012 by the Central Board of Direct Taxes to minimize any confusion regarding the pricing of international transactions through a mutual agreement between the taxpayer and tax authority.