Transfer Pricing Litigation: A Decade in Data

India's transfer pricing fight is quietly changing shape. The numbers tell a story worth reading.

By Fiscal Metrics Research17 August 2026 405

Transfer Pricing Litigation: A Decade in Data — · *Unsplash*

In May 2026, the Supreme Court spent very little time on Pernod Ricard India. The Income Tax Department had turned up 384 days late with its appeal, and a bench of Justices J.B. Pardiwala and Vijay Bishnoi declined to condone the delay — adding, for good measure, that it saw no reason to disturb the Delhi High Court's ruling of August 2024. The underlying quarrel was about advertising and brand-building spend, and whether money a subsidiary puts behind a whisky label in India is secretly a service rendered to a French parent. The assessment years at issue began in 2007-08.

Roughly two decades from notice to full stop. That is the version of Indian transfer pricing litigation everyone remembers, and it is the version that is slowly, measurably, going out of fashion.

The line that actually moved

If you want one number that captures the last decade, it is not an adjustment figure. It is the count of Advance Pricing Agreements. The CBDT signed 95 in FY 2022-23, then 125, then 174, then 220 in FY 2025-26 — the last figure taken from the eighth Annual APA Report published in July 2026. Cumulatively, 1,035 agreements had been signed by 31 March 2026: 751 unilateral and 284 bilateral.

A small detail worth flagging, because it tells you something about how these numbers are compiled. The CBDT's press release of 31 March 2026 announced 219 APAs and a cumulative 1,034. The Annual Report, four months later, says 220 and 1,035. One agreement, presumably, landed on the right side of a cut-off after the release went out. Nobody is hiding anything; it is simply what happens when a live programme is counted twice.

Behind the headline are the numbers that matter more. Since the programme opened in 2012, 2,277 applications have been filed — 1,557 unilateral, 720 bilateral. Of those, 1,436 have been disposed of. Which leaves 841 still under processing. Cumulatively, signed APAs now cover 4,559 agreement years plus 1,173 rollback years: 5,732 assessment years that will never generate a Transfer Pricing Officer's order, a Dispute Resolution Panel objection, a Tribunal appeal, or a High Court admission hearing.

The queue is the real story

Certainty at that scale takes time. The median resolution period is 36 months for a unilateral APA and 38 months for a bilateral one; the average for unilateral cases concluded in FY 2025-26 was closer to 40.8 months. About 45% of cases close within two years and 65% within three. Renewals move faster — 86 of the 136 unilateral agreements signed last year were renewals, averaging 29 months.

So the honest reading is not that India has abolished transfer pricing disputes. It is that a large share of them now queue in an administrative process for three years instead of grinding through four appellate tiers for fifteen. The OECD, on its part, identified India in 2025 as the third fastest growing APA programme globally, with 103% growth. The CBDT also reports that APAs signed over the previous two years covered more than 35% of India's captive IT industry by turnover — which is another way of saying the single most litigated sector in Indian transfer pricing history has largely stepped out of the ring.

“The most telling number in India's transfer pricing story is not the size of any adjustment. It is 841 — the applications still sitting in the APA queue, each one a dispute that has chosen, in advance, not to become litigation.”

What the treaty data shows

The Mutual Agreement Procedure tells a parallel story. In calendar year 2024, India received 96 new MAP cases and resolved 131, pulling its closing inventory down from 421 to 386. Globally, the OECD's 2024 statistics put the average resolution time for a transfer pricing MAP case at 30.9 months, marginally better than the previous year's 32, with 76% of cases reaching full resolution. India and Japan were jointly recognised at the OECD's 2025 Tax Certainty Day for efficiency in handling shared cases.

Bilateral agreements now cluster where the trade does. Of the 84 bilateral APAs signed in FY 2025-26, 39 involved the United States. Finland accounted for nine, Singapore eight, the United Kingdom seven, Japan six. India also signed first-ever bilateral agreements with France, Ireland, Indonesia and Sweden — modest numbers individually, but each one opens a channel that did not exist before.

What is still being fought about

Roughly 10,000 reported transfer pricing rulings have accumulated in India since the regime began in 2001, and the subject matter has been remarkably stable. Comparables, filters, and the choice of tested party remain the core of most disputes. The APA data confirms why: of 421 international transactions covered by unilateral agreements last year, 239 were benchmarked using the Transactional Net Margin Method and 168 under the residual 'Other Method'. Only 14 used Comparable Uncontrolled Price, one used Profit Split, and not a single transaction used Cost Plus or Resale Price. When almost everything is benchmarked on net margins, almost every argument becomes an argument about which companies belong in the comparable set.

Two judgments shaped the appellate terrain. In SAP Labs India (April 2023), the Supreme Court overruled the Karnataka High Court's position in Softbrands, holding that a Tribunal's determination of arm's length price is not immune from scrutiny under section 260A — a High Court may examine whether the statutory guidelines were followed and whether the findings are perverse. It restored taxpayer and revenue access to the High Courts in equal measure, and it did nothing at all for speed. More recently, in AON Consulting (February 2025), the Delhi High Court held that a pricing framework agreed with the United States under MAP cannot be transplanted onto transactions with associated enterprises in other jurisdictions — useful discipline, and a reminder that a settlement resolves what it covers and no more.

The legislative pivot

The Finance Act, 2025 introduced block transfer pricing assessment through new sub-sections in section 92CA and a recomputation mechanism in section 155. A taxpayer may opt in, and an arm's length price determined for a base year then applies to similar transactions for the two following years. It took effect from 1 April 2026, for assessment year 2026-27 onwards. Crucially, it changes the assessment regime, not the documentation regime: annual benchmarking, the accountant's report, master file and country-by-country obligations all survive intact.

The rest of the architecture moved at the same time. The Income-tax Act, 2025 and Income-tax Rules, 2026 came into force on 1 April 2026, with transfer pricing relocated to Chapter 10 and Form 3CEB replaced by Form 48 — which reports transactions in a structured, transaction-wise format rather than narrative disclosure, and therefore feeds a considerably better-informed risk-selection engine. Safe harbour, meanwhile, has been scaled up twice: the eligibility threshold went from ₹200 crore to ₹300 crore by notification in March 2025, and the Finance Act, 2026 raised it to ₹2,000 crore while consolidating several technology segments into a single Information Technology Services category at a uniform 15.5% margin.

That last change is the one to watch. A ₹2,000 crore threshold covers a very large share of the captive services sector that has supplied Indian transfer pricing benches with material for twenty years.

The backdrop nobody should ignore

None of this happens in a vacuum. Roughly 5.77 lakh income tax appeals are pending across forums, carrying disputed demand of over ₹10 lakh crore, with about 2.25 lakh identified for disposal in FY 2025-26. The government's raising of departmental appeal thresholds in September 2024 — ₹60 lakh at the Tribunal, ₹2 crore at the High Courts, ₹5 crore at the Supreme Court — produced an estimated reduction of ₹16,688.68 crore in disputed demand, according to an answer placed before the Rajya Sabha in August 2026. Thousands of departmental appeals were withdrawn or never filed.

Transfer pricing is a slice of that pile, and it is a slice that has been managed more deliberately than most.

What the next decade of data will need to answer

Three questions. First, whether block assessment genuinely reduces disputes or merely relocates them — the fight over whether a transaction is 'similar' enough to qualify is a new fight, and it will be litigated. Second, whether the APA queue can absorb rising demand without the median drifting past three years; 841 pending applications against roughly 215 filings a year is a workable ratio only if disposal keeps pace. Third, whether the stock clears. Prevention mechanisms work on the flow. The cases from 2007-08 still moving through the system, as Pernod Ricard's did until last May, are a stock problem, and no safe harbour margin will touch them.

The direction of travel is clear enough. India spent its first decade of transfer pricing building a litigation machine and its second learning that the cheapest dispute is the one settled before the return is filed. The data, for once, agrees with the policy.