Government Fast-Tracks Advance Pricing Agreements for IT Services Companies
- Strong Interest: IT services companies signed 76 APAs in FY 2023–24 and 112 in FY 2024–25.
- Fast-Track Process: Unilateral APAs for IT services to be concluded within two years, and extendable by six months.
- Modified Returns: The Finance Bill 2026 allows associated enterprises to file modified returns within three months of APA agreements.
- Ease of Doing Business: Reforms aim to reduce tax disputes and enhance India’s global competitiveness in IT services.
Hyderabad/New Delhi: The Ministry of Finance has announced major reforms to streamline the Advance Pricing Agreement (APA) programme, particularly benefiting India’s Information Technology (IT) and IT-enabled services sector. Responding to a question by MP Etala Rajender in the Lok Sabha, Minister of State for Finance Pankaj Chaudhary confirmed that IT companies have shown strong interest in APAs, with 76 agreements signed in FY 2023–24 and 112 in FY 2024–25.
Highlighting the government’s commitment to ease of doing business, Chaudhary stated that unilateral APAs involving IT services will now be concluded within two years of application, with a possible extension of six months upon request. This provision has been incorporated into the Income-tax Rules, 2026, following the Finance Minister’s budget announcement earlier this year.
The Minister further explained that the Finance Bill, 2026, proposes extending the facility of modified returns not only to entities entering into APAs but also to their associated enterprises. Such returns must be filed within three months of the agreement, covering all relevant tax years included in the APA.
These measures are expected to provide greater tax certainty, reduce disputes, and strengthen India’s appeal as a global hub for IT services. By fast-tracking APA processes and widening the scope of modified returns, the government aims to ensure smoother compliance and fairer treatment for genuine taxpayers.
