Form FN052- Annual Compliance Report on Advance Pricing Agreement

Purpose:

Form 52 is an Annual Compliance Report on Advance Pricing Agreement (APA) under the Indian Income-tax Act, 2025. It is used by taxpayers who have entered into an APA with the Central Board of Direct Taxes (CBDT). The form is used to confirm that the terms and conditions agreed upon in the Advance Pricing Agreement have been complied with during the relevant financial year. Form 52 is filed as per Rule 113 of the Income-tax Rules, 2026.

Who Should File:

Any taxpayer who has a Unilateral, Bilateral, or Multilateral APA with Indian tax authorities.

Frequency & Due Dates:

A separate report in Form 52 must be filed for each year covered by the APA, within thirty days of the due date of filing the income tax return for that year, or within ninety days of entering into an agreement, whichever is later, as set out in Rule 113 of the Income-tax Rules, 2026.

Structure of Form 52:

⮚ Part A: Particulars of the Person

⮚ Part B: Other Details (including):

⮚ Details of adjustment as per APA for each covered transaction (method of calculation of adjustment laid out in Annexure) along with amount of adjustment made in return of income

⮚ Specific details regarding compliance to the terms and conditions laid out in the signed APAs, and furnishing of reasons in case of deviation from said terms and conditions (in a separate enclosure)

What are the documents required to file the Form 52?

All documents as agreed upon in the APA to justify the transfer pricing methodology and computation of arm’s length price are required at the time of filing.

What is the process flow of filing Form 52?

The process flow includes following steps:

1. The Applicant shall file Form 52 electronically to the Principal Chief Commissioner of Income-tax (International Taxation)
2. The PCCIT (IT) shall send one copy of annual compliance report to the competent authority in India, one copy to the Commissioner of Income-tax who has the jurisdiction over the income-tax assessment of the Taxpayer and one copy to the Transfer Pricing Officer (TPO) having the jurisdiction over the Taxpayer.

Outcome of Processed Form 52:

• Following the filing of the ACR, the jurisdictional TPO would carry out a compliance audit for each of the years under the APA term. The TPO would provide a report to the PCCIT (IT) (for unilateral APAs) or the competent authority in India (for bilateral and multilateral APAs).
• The APA can be cancelled for not filing the ACR in time and also for furnishing the same with material errors.

Brief note on broad or qualitative changes proposed:

• The erstwhile Form 3CEF had a set of very general queries regarding compliance with the terms set forth in the Agreement by the Applicant. For example, agreed profit level indicator (PLI) vs actual achievement, business model agreed upon vs actual business model adopted. Further, any variance from the critical assumptions agreed upon in the APA was required to be indicated in general terms by the Applicant, which could create avoidable confusion regarding compliance at the time of audit.
• In order to ensure clarity in compliance, tabular computation of adjustment in case of variation for various profit level indicators utilised in APAs has been introduced. Cases where multiple transactions could be aggregated with one PLI have also been accounted for.
• Further, specific Critical Assumptions laid down in APAs with regard to FAR of the applicant, Associated Enterprises (AEs), Invoicing and Credit terms and other compliances mandated in the APA have also been explicitly outlined in the Annexure to the Form. This shall ensure clarity in compliance requirements for the Applicant and ease in carrying out compliance audit by the jurisdictional TPO, reducing opportunities of variance in understanding for both sides.

Challenges and Solutions:

• The erstwhile version of the form presented the challenge of ensuring clear compliance to the terms and conditions set forth in the APA, in the absence of a mechanism inbuilt in the Form for calculation of adjustment (if any) in case of deviation from said terms and conditions.
• This problem has been solved by incorporating a tabular computation in the Form itself to enable the Applicant to explicitly outline the adjustment made, ensuring clarity for the Applicant as well as lowering compliance burden at the time of compliance audit.
• The incorporation of details of common Critical Assumptions in APAs, into the Form itself further lowers compliance burden for the Applicant at the time of audit.

Common Changes made across Forms:

1. To make Forms system-friendly and enable e-filing and uploading, certain anomalies found due to grouping of Name, Designation, Address, PAN and Aadhaar number have been separated into different boxes.
2. Assessment / Financial / Previous year or years have been replaced with Tax year or years, wherever appearing in the Form/Annexure.
3. Sections, Clauses and Schedules changes as per the Income-tax Act, 2025.
4. Currency symbol “Rs.” has been replaced with “₹”.