In order to have a smooth tax regime between India and UK, the Central Board of Direct Taxes (CBT) signed three Bilateral Advance Pricing Agreements (APAs) with the Competent Authority of United Kingdom (UK).
According to the Finance Ministry statement,"These Agreements are a result of the understanding reached with the Competent Authority of United Kingdom (UK) some time ago. The competent Authorities of India and UK had earlier exchanged mutual agreements amongst them under the Mutual Agreement Procedure (MAP) Article of India-UK Double Taxation Avoidance Convention (DTAC)."
The Advanced Pricing Agreement (APA) is an ahead-of-time agreement between a taxpayer and a tax authority on an appropriate transfer pricing methodology (TPM) for a set of transactions at issue over a fixed period of time. The APA programme was introduced by Finance Act 2012 which is signed betweem taxpayer and central tax authority on an appropriate transfer pricing methodology for determining the value of assets and taxes on intra-group overseen transactions.