# Advance Pricing Agreement (APA)

> An Advance Pricing Agreement fixes the transfer pricing method and terms for international transactions for up to five future years, and can be rolled back to cover up to four earlier years. A unilateral APA is agreed with the Indian tax authorities only; a bilateral or multilateral APA also involves the tax authority of the other country, removing double-taxation risk. It suits groups with recurring transactions and a history of TP disputes.

Practice: Transfer Pricing — https://www.industax.com/services/transfer-pricing/

APAs take time and require detailed economic analysis, but they replace years of audits and appeals with certainty. India has signed hundreds of APAs, mostly with IT and IT-enabled services companies.

We assess suitability, prepare the pre-filing consultation and application, and support negotiations.

## Key facts

| Item | Detail |
| --- | --- |
| Future years | Up to 5 |
| Rollback | Up to 4 earlier years |
| Types | Unilateral, bilateral, multilateral |
| Best for | Recurring transactions with dispute history |

## Who needs this

- Captive service centres and GCCs
- Groups with repeated TP adjustments
- Companies wanting certainty for investors

## What's included

- Suitability assessment
- Pre-filing and application
- Negotiation support
- Annual compliance reports

## Documents

- Past TP documentation and assessments
- Intercompany agreements
- Financial projections

## Process

1. **Assess** — APA suitability checked.
2. **Apply** — Pre-filing and formal application.
3. **Agree** — Negotiation and agreement signed.

## FAQs

### How long does an APA take in India?

Unilateral APAs often take two to three years; bilateral APAs can take longer because two tax authorities must agree.

### Does an APA stop all TP audits?

For covered transactions and years, yes, provided the agreed terms are followed and annual compliance reports are filed.

### Is rollback automatic?

No. It must be requested and is subject to conditions; it can settle disputes for past years.

## Official sources

- Income Tax Department — Transfer Pricing: https://www.incometaxindia.gov.in/

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Canonical page: https://www.industax.com/services/transfer-pricing/advance-pricing-agreement
Publisher: Indus Tax — CA-led tax and compliance firm (https://www.industax.com). Contact: info@industax.com, 9059139258.
This is general information, not advice for your specific facts.