"The Advance Pricing Agreement (APA) is an arrangement between the taxpayer and the tax authority covering future transactions, with a view to solve the potential transfer pricing disputes in a cooperative manner. APA provisions were introduced in India with effect from July 1, 2012 by the Hon’ble Finance Minister in the Union Budget 2012. The Central Board of Direct Taxes (CBDT), by notification in the official gazette, has introduced the detailed rules providing the procedures and necessary forms for application/administration of the APAs.
The rules provide for constitution of an APA team (Team) which shall consist of income tax authority and experts from economics, statistics, law and other necessary fields. APAs can be applied for existing as well proposed transactions."