India and the UK today signed three Bilateral Advance Pricing Agreements (APAs) that are aimed at reducing litigation in the Indian transfer pricing arena.

The Central Board of Direct Taxes (CBDT) signed the three pacts taking the total APAs signed (both- bilateral and unilateral) so far to 111.

"These agreements are a result of the understanding reached with the Competent Authority of the UK some time ago," the finance ministry said in a statement.

The competent authorities of India and the UK had earlier exchanged mutual agreements among them under the Mutual Agreement Procedure (MAP) Article of the India-UK Double Taxation Avoidance Convention (DTAC).

The three agreements cover international transactions in the nature of payment of intra-group service charges and pertain to the telecom industry.

They also have a rollback provision. With this, India and the UK have concluded five five bilateral APAs and some more will be concluded in the near future.

The APA programme was introduced by the Finance Act, 2012 with a view to providing a predictable and non-adversarial tax regime and reducing litigation in Indian transfer pricing.

An APA can be entered into for a maximum of 5 years at a time.

Since the notification of the APA scheme came in August 2012, a total of about 700 APA applications have been received during the first four years of the programme, which points to its wide acceptance by the taxpayers.

Rollback of APAs was announced in the Budget in July 2014 to provide certainty on the pricing of international transactions for four prior years (rollback years) preceding the first year from which APA is to be applicable.

The ministry said the Indian APA programme has been appreciated nationally and internationally for being able to address complex transfer pricing issues in a fair and transparent manner.