India Seeks Clarity in International Tax Cases Under New Income Tax Act

India's Income-tax Department is seeking clearer outcomes in international tax cases by expanding taxpayer outreach, standardizing cross-border assessments, and using overseas units to identify gaps in guidance. This effort comes as taxpayers and officers adjust to a new statutory framework introduced by the Income Tax Act 2025, which replaced the previous framework on April 1, 2026.

## A new law is forcing tax officers and taxpayers to reset their working rules

The Income Tax Act 2025 has introduced new compliance forms, including Form 50 for pre-filing consultation, Form 51 for Advance Pricing Agreement applications, and Form 54 for renewal. The department has also introduced new rules for dealing with overseas income, transfer pricing, and cross-border structures. Ravi Agrawal, chairman of the Central Board of Direct Taxes, has linked the legislative change to compliance, stating that the new Income Tax Act will help bring more clarity to processes and trigger higher compliance.

## Advance pricing agreements are becoming the department’s main certainty tool

The Advance Pricing Agreement programme has reached record levels, with over 1,000 cumulative agreements signed to prevent disputes. The programme provides certainty for more than 5,500 assessment years and has helped prevent or resolve over 2,800 transfer-pricing matters. The department has also widened its reach, with new agreements reached for the first time with France, Ireland, Indonesia, and Sweden. The following table summarizes the Advance Pricing Agreement programme's output: | Category | FY26 Agreements | Cumulative Agreements | | --- | --- | --- | | Unilateral | 750 | | | Bilateral | 284 | | | Total | 220 | 1,035 |

## Consistency is being pursued alongside a tougher foreign-remittance check

The department has launched a nationwide verification exercise covering 394 suspicious entities and 36 professionals connected to suspicious foreign remittances. The exercise includes 117 entities in land-border states and examines shell entities and alleged bogus foreign remittances made under the guise of charitable donations. The department's approach reflects a broader shift from aggressive audits toward data-led reminders, with 12.5 million updated ITRs through alerts rather than formal notices.

## Officials are linking cross-border certainty to fewer appeals and more digital administration

The department is transitioning to digital-first administration, with a roadmap for taxpayer services and a focus on certainty as a central taxpayer concern. The Finance Act 2026 has consolidated multiple technology segments into one category with a uniform 15.5% margin, providing a faster, lower-cost alternative to an APA for qualifying transactions. The policy changes also reach the digital economy, with the removal of certain notification requirements for tax exemptions affecting foreign technology and data-center businesses.