The introduction of a 15.5% safe harbour margin for IT and ITeS services in India's 2026 union budget is reshaping the transfer pricing landscape for multinationals and global capability centres (GCCs). This new regime offers a lower margin compared to existing advance pricing agreements (APAs), which range from 16.5% to 18.5%. Companies now face critical decisions regarding their tax strategies, particularly those already operating under APAs. Vijay Iyer, a partner at EY India, highlights the dilemma of whether to remain locked into higher-margin APAs or switch to the more attractive safe harbour option. The Central Board of Direct Taxes (CBDT) has provided guidance allowing companies to sign APAs while retaining the option to opt out later if the safe harbour proves beneficial. Experts suggest that both systems can coexist, with APAs remaining essential for complex cases, while the new rules may expedite the resolution of pending APA applications. As multinationals assess their positions, the evolving landscape will require careful consideration of future tax planning strategies.