Advance Pricing Agreement (APA) Programme – Annual APA Report FY 2025-26, published by the Central Board of Direct Taxes (CBDT), Department of Revenue, Ministry of Finance, Government of India, in July 2026 is the eighth annual report on India’s APA programme and presents the legislative framework, administrative developments, statistical analysis, reforms introduced during FY 2025-26, progress in unilateral and bilateral APAs, developments relating to the Mutual Agreement Procedure (MAP), and future direction of the programme.
The Chairman’s Foreword states that 1,035 APAs had been entered into by CBDT up to 31 March 2026, with 220 APAs signed during FY 2025-26, one of the highest annual APA signings since the programme began. The report notes the introduction of the Income-tax Act, 2025 and Income-tax Rules, 2026, which introduced a simplified legal framework along with APA administration reforms including simplified APA application forms, uniform filing fees and prescribed time limits for unilateral APA cases involving IT services. According to the report, the APAs signed so far provide certainty for more than 5,500 assessment years, while bilateral APAs continue to provide tax certainty and relief from double taxation in treaty jurisdictions.
The report highlights FY 2025-26 as a milestone year. CBDT signed 220 APAs, including 84 Bilateral APAs (BAPAs), the highest number of bilateral agreements signed in any financial year. It also records India’s first bilateral APAs with France, Indonesia, Ireland and Sweden. The median time for resolution is stated to be 36 months for Unilateral APAs (UAPAs) and 38 months for BAPAs. The bilateral agreements resulted from Mutual Agreements with 12 treaty partners: the United States, Finland, the United Kingdom, Singapore, Japan, South Korea, Australia, Denmark, Sweden, France, Indonesia and Ireland.
The report explains reforms introduced after implementation of the Income-tax Act, 2025 and the Union Budget 2026. APA provisions are now governed under the new Act and Rules. CBDT revised the APA model agreement template to accommodate the transition from the Income-tax Act, 1961 to the Income-tax Act, 2025 by incorporating references relating to modified returns, annual compliance reports, compliance audits, secondary adjustments, revisions and cancellations of APAs. The revised template is intended to clarify the interaction between the old and new legislative regimes for taxpayers whose APA periods span both statutes.
The report also describes reforms relating to the new Safe Harbour regime. Since many IT service APA applications covered years both before and after 1 April 2026, CBDT issued an Office Memorandum dated 24 March 2026 introducing a Critical Assumption allowing taxpayers entering into UAPAs to opt for Safe Harbour in future years. The report states that this allows taxpayers to obtain certainty for earlier years through APAs while retaining eligibility for Safe Harbour for later years.
Chapter 1 explains the APA programme. It defines an Advance Pricing Agreement as an agreement between the tax administration and a taxpayer determining in advance the arm’s length price or the methodology for determining the arm’s length price in relation to an international transaction. The report states that the programme was introduced through the Finance Act, 2012 by inserting sections 92CC and 92CD into the Income-tax Act, 1961 and operationalised through Rules 10F to 10T inserted by Notification No. 36/2012 dated 30 August 2012. Rollback provisions introduced by the Finance (No.2) Act, 2014 allow application of agreed transfer pricing methodology for up to four prior years, enabling certainty for up to nine years including the APA period. The report describes the processing of unilateral and bilateral APAs by dedicated APA teams and the Foreign Tax & Tax Research Division of CBDT, together with negotiations by India’s Competent Authorities in bilateral cases.
The report records that over 2,000 APA applications have been filed since inception. Till 31 March 2026, 1,035 APAs had been signed, comprising 751 unilateral APAs and 284 bilateral APAs. During FY 2025-26, the 220 APAs signed constituted one of the highest annual totals reported by any country, according to the report. OECD is stated to have recognised India’s APA programme in 2025 as the third fastest growing APA programme, recording 103% growth. The report also states that APAs entered during the previous two years covered more than 35% (by turnover) of India’s captive IT industry.
Statistical analysis shows that by 31 March 2026, 2,277 APA applications had been filed, consisting of 1,557 unilateral and 720 bilateral applications. Of these, 1,436 applications had been disposed of while 841 remained under processing. During FY 2025-26, 215 applications were filed, comprising 112 UAPAs and 103 BAPAs, maintaining overall filing levels while bilateral filings increased.
The report states that agreements signed during FY 2025-26 provided certainty for 1,093 APA years and 239 rollback years, totalling 1,332 years. Cumulatively, APAs signed till 31 March 2026 covered 4,559 APA years and 1,173 rollback years, amounting to 5,732 years of tax certainty.
Regarding unilateral APAs, the report records 136 UAPAs signed during FY 2025-26. Of these, 46 contained rollback provisions. The median processing period was 36 months, while the average processing time for FY 2025-26 cases was approximately 40.8 months. The report notes that approximately 45% of cases were concluded within two years and 65% within three years. Average processing time has reduced over recent years.
The report analyses the economic profile of UAPA applicants. Of the 136 agreements, 98 related to service sector entities, 15 to manufacturing and trading, 11 to manufacturing, with remaining agreements involving combinations of trading, manufacturing and services. Industry-wise, the largest segment comprised Information Technology (55 agreements) followed by manufacturing and banking/insurance, consultancy, pharmaceutical, non-banking investment advisory services, trading and logistics, automotive, engineering services and several other industries.
The report states that 421 international transactions were covered under the 136 UAPAs signed during FY 2025-26. Frequently covered transactions included provision of IT enabled services, export or sale of finished goods, receipt of management or corporate support services, payment of royalty or licence fees, software development services, import of raw materials, reimbursement of expenses, interest payments, manufacturing, engineering design support services and investment advisory services. The annexure lists additional covered transactions including marketing support services, ESOP reimbursements, engineering consultancy, professional services, contract research and development, finance and accounting support services, cost allocations, contract manufacturing and several other categories.
The report notes that 421 transactions were benchmarked using transfer pricing methodologies. Transactional Net Margin Method (TNMM) was applied to 239 transactions, Other Method to 168, Comparable Uncontrolled Price (CUP) to 14, Profit Split Method to 1, while no transaction used the Cost Plus Method or Resale Price Method.
Associated enterprises covered by the signed UAPAs were located across 93 countries, with the highest numbers involving the United States, Germany, United Kingdom, Singapore, China, Japan, Australia, France, Netherlands, Malaysia, India, Canada, Ireland, UAE, Switzerland, Thailand and Sweden, among numerous other jurisdictions. The report further states that 86 of the 136 UAPAs signed during FY 2025-26 were renewal cases, with an average resolution period of 29 months.
The bilateral APA chapter records 103 BAPA applications during FY 2025-26, the highest annual filing, including three converted from UAPAs. The largest number of applications involved the United States, followed by the United Kingdom, Japan, Singapore, Denmark, Switzerland, Ireland and France. During FY 2025-26, 84 bilateral APAs were signed, comprising 39 with the United States, 9 with Finland, 8 with Singapore, 7 with the United Kingdom, 6 with Japan, 3 each with Denmark, South Korea and Australia, 2 each with France and Sweden, and 1 each with Ireland and Indonesia. The report attributes increasing BAPA signings to greater communication with treaty partners and growing maturity of the programme.
In the chapter titled “Looking Ahead”, the report states that increasing unilateral and bilateral APA signings reflect taxpayer confidence in the programme. It recommends earlier filing of APA applications, particularly renewal applications, to enable tax certainty within the first APA year. It also notes that frequent meetings between Competent Authorities, virtual interactions, information symmetry and proactive taxpayer responses contribute to improved bilateral resolutions. The report states that the APA programme has matured steadily since FY 2012-13 and emphasises efforts to utilise accumulated experience for providing tax certainty in a truly advance manner.
The report also includes a chapter on the Mutual Agreement Procedure (MAP), describing it as an important international tax dispute resolution mechanism embedded in India’s Double Taxation Avoidance Agreements. It states that MAP complements the APA programme by resolving taxation not in accordance with treaty provisions and contributes to tax certainty for multinational enterprises. The report notes India’s commitment under the OECD/G20 Base Erosion and Profit Shifting (BEPS) Project, particularly Action 14, and describes reforms aimed at improving transparency, taxpayer confidence, timely dispute resolution and implementation of MAP outcomes. It further states that the MAP programme remains a cornerstone of India’s efforts to provide a fair, predictable and non-adversarial tax environment.
The final chapters include references to media coverage of the APA programme, photographs of meetings with treaty partners and APA signings, and annexures listing transactions covered by UAPAs signed during FY 2025-26. The report concludes that the Government remains committed to further strengthening the APA programme and improving its effectiveness.
Read Full Report Here: https://www.incometaxindia.gov.in/documents/d/guest/apa-report2025-26-2-pdf
