Experts indicate that Advance Pricing Agreements will continue to play a crucial role despite expanded safe harbour rules, especially for complex cross-border transactions and large multinational enterprises.

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• Following Union Budget 2026, the safe harbour regime has been expanded with simplified rules
• Introduces a uniform 15.5% margin and higher eligibility threshold of ₹2,000 crore
• Safe harbour provides a simplified, low-cost, automated compliance mechanism
• Reduces litigation and Transfer Pricing disputes for eligible businesses
• Despite benefits, Advance Pricing Agreements (APAs) remain relevant
• APAs offer flexibility and customised solutions for complex international transactions
• Provide multi-year tax certainty to businesses
• Can also cover past disputes under litigation, unlike safe harbour provisions
• Bilateral APAs help avoid double taxation across jurisdictions
• Enhance cross-border tax certainty for multinational companies
• Large corporations with transactions exceeding ₹2,000 crore prefer APAs
• Government allows flexibility to switch between APA and safe harbour regimes
• Improves ease of doing business and compliance efficiency
• Experts suggest both systems will coexist
• Safe harbour suits smaller and routine transactions
• APAs remain essential for complex, high-value, and strategic deals