The Central Board of Direct Taxes (CBDT) has signed seven unilateral Advance Pricing Agreements (APAs) with Indian taxpayers to reduce tax litigation. With this, CBDT has so far entered into 77 APAs. This includes three bilateral APAs and 74 unilateral APAs. These 7 APAs signed pertain to various sectors like banking, information technology and automotives. Some of these APAs have rollback provisions. What is Advance Pricing Agreements (APAs)? APA usually is signed between a taxpayer and the central tax authority (in case of India it is CBDT) on an appropriating transfer pricing methodology for determining the value of assets and taxes on intra-group overseas transactions. It seeks to introduce certainty in tax law by reducing compliance costs and make tax regime investment friendly. It provides certainty to taxpayers regarding transfer pricing that aim to avoid disputes between taxpayer and tax regulator. In India, Advance Pricing Agreement mechanism was introduced in 2012 as per the provisions of the Income Tax Act, 1961. In case of Indian context, APAs seeks to give

1. Boost to economy and ease of doing
2.  Provide alternative path to the investors with rollback provision to reduce litigation
3.  Strengthen Government’s mission of fostering a non-adversarial tax regime. Transfer pricing: It is referred to the fixing of the price for goods and services sold between related legal subsidiaries (entities) within an enterprise.