Transfer Pricing under Income-tax Act 2025: New Sections, Form 48 and What Changed | TP Doc Gen AI

Transfer Pricing under Income-tax Act 2025: New Sections, Form 48 and What Changed

Introduction

From 1 April 2026, India's transfer pricing code sits in a new statute. The Income-tax Act, 2025 replaced the Income-tax Act, 1961, and the Income-tax Rules, 2026 replaced the 1962 Rules. Every TP report, engagement letter and appeal ground now needs the right citation for the right year.

This affects CA firms that prepare TP studies, in-house tax teams of Indian subsidiaries, and CFOs who sign off on the accountant's report. The substance has mostly carried across. The report form, the TPO deadline and one new multi-year option have not.

After reading this guide, you will be able to map each old section and rule to its new number. You will also know which Act governs a given year, when Form 48 is due, and what to change in your templates for tax year 2026-27.

Quick answer: Transfer pricing under the Income-tax Act, 2025 applies from tax year 2026-27 (1 April 2026 onwards). Sections 92 to 92F of the 1961 Act now sit in sections 161 to 173. The TP rules move to Rules 78 to 85 of the Income-tax Rules, 2026, and Form 48 replaces Form 3CEB. FY 2025-26 (AY 2026-27) stays under the 1961 Act. The main substantive additions are a three-year block ALP option and a revised TPO deadline.

Key takeaways

1. The Income-tax Act, 2025 repealed the 1961 Act, but section 536 keeps the 1961 Act's procedure for tax years that began before 1 April 2026.
2. Chapter X of the new Act runs from section 161 (ALP computation) to section 173 (definitions); section 166 replaces section 92CA.
3. Form 48 under section 172 and Rule 85 replaces Form 3CEB; it is due one month before the 30 November return due date.
4. Section 166(9) and Rule 82 let one TPO determination cover two further tax years, using Forms 46 and 47.
5. The ALP range rule (35th to 65th percentile) continues in Rule 81 of the Income-tax Rules, 2026.

When does transfer pricing under Income-tax Act 2025 start to apply?

Transfer pricing under the Income-tax Act, 2025 applies to transactions in tax year 2026-27, which began on 1 April 2026. Earlier years, including FY 2025-26 (AY 2026-27), remain under the Income-tax Act, 1961 for their TP reports, assessments and appeals, whenever those take place.

Section 3(1) of the Income-tax Act, 2025 defines a "tax year" as the twelve-month financial year starting 1 April. That single term replaces the old pair of "previous year" and "assessment year".

The 1961 Act does not disappear overnight. Section 536 of the 2025 Act repeals it in sub-section (1). Sub-section (2) then saves proceedings for tax years that began before 1 April 2026, including assessments, appeals and penalties, and they follow the old Act's procedure.

So a CA firm runs two regimes side by side for several years:

Any TPO reference, DRP objection or ITAT appeal for AY 2026-27 or earlier keeps the 1961 section numbers. That holds even when the hearing takes place in 2027 or later.

Which Act governs a year: the practical test

In practice, the governing Act follows the year in which the transaction took place. It does not follow the date the report is filed or the date a hearing is listed.

A common trap is to update a firm's templates in April 2026 and then use them for FY 2025-26 reports filed later that year. Those reports must still cite the 1961 Act, Rule 10B to Rule 10E and Form 3CEB.

What are the new section numbers for sections 92 to 92F?

Sections 92 to 92F of the Income-tax Act, 1961 now sit in sections 161 to 173 of the Income-tax Act, 2025. Chapter X, titled "Special provisions relating to avoidance of tax", mirrors the old order almost one-for-one, so section 92 becomes section 161 and section 92F becomes section 173.

The rest of Chapter X also carries across. Section 176 covers notified jurisdictional areas, and section 177 limits interest deductions.

What carried across without a change in substance

Section 165 keeps the six methods, the "most appropriate method" test and the tolerance band of up to 3% of the actual price. Section 170 keeps the ₹1 crore trigger for secondary adjustment under section 92CE and the 18% additional tax option on money not repatriated.

My advice is to keep this table in the review checklist for every tax year 2026-27 file. A reviewer should test each section reference in the report against it before sign-off.

Which Income-tax Rules 2026 replace Rules 10B to 10E?

Rules 10B to 10E of the Income-tax Rules, 1962 are replaced by Rules 78 to 85 of the Income-tax Rules, 2026. The CBDT notified the 2026 Rules on 20 March 2026, effective 1 April 2026, and the TP forms move to the Form 46 to 52 block.

For a side-by-side reading of the old and new rule text, RSM India's newsflash on the 2026 Rules is a useful practitioner summary.

Methods and the arm's length range

Rule 79(1) lists the five named methods and, as clause (f), any other method under Rule 78. Rule 81 keeps the mechanics most firms know from Rule 10CA. With six or more data points, the range runs from the 35th to the 65th percentile, and a price outside it is adjusted to the median.

With fewer than six data points, the arithmetic mean applies with a tolerance band. Our Rule 10CA arm's length range worked example still holds; only the citation changes.

Documentation, safe harbour and APA

Rule 84 lists thirteen categories of records. They must exist by the "specified date" in section 173 and be kept for nine years from the end of the relevant tax year. The documentation thresholds themselves are covered in our India TP threshold guide.

Safe harbour and APA procedures were also rewritten in the 2026 Rules. We cover those changes in India safe harbour rules vs APA rather than repeat them here.

What is Form 48 and when is it due?

Form 48 is the accountant's report under section 172 of the Income-tax Act, 2025, prescribed by Rule 85 of the Income-tax Rules, 2026. It replaces Form 3CEB and is due one month before the return due date, which gives 31 October 2027 for tax year 2026-27.

The CBDT's Form 48 FAQ maps it to Form 3CEB, section 92E and Rule 10E. Section 173(d) sets the "specified date" at one month before the return due date.

Section 263(1)(c) sets 30 November as the return due date for anyone required to furnish a section 172 report. For tax year 2026-27, Form 48 is therefore due by 31 October 2027 and the return by 30 November 2027, unless the CBDT extends either date.

The six parts of Form 48

The CBDT FAQ describes a six-part layout:

1. Part A: assessee particulars.
2. Part B: aggregate transaction values, auto-populated from Parts C and D.
3. Part C: international transactions, associated enterprises and APA-covered transactions.
4. Part D: specified domestic transactions.
5. Part E: ALP determination and any adjustment (not filled for APA-covered transactions reported in Part C).
6. Part F: documentation details where transactions exceed the specified amount.

The form uses system-generated IDs for each associated enterprise and transaction, plus drop-downs for relationship and transaction type. It is filed online only, through the e-filing portal.

What this means for the year-end close

The first thing a reviewer will ask for under Form 48 is transaction-level ALP data for Part E. That data is easiest to collect at the year-end close, not in October.

Our Form 3CEB filing guide still applies to FY 2025-26 reports, which remain on the old form.

What changed in substance, and what was only renumbered?

Most of Chapter X was renumbered and redrafted in plainer language without a policy shift. Three changes matter in practice: the block ALP option in section 166(9), a month-based TPO deadline in section 166(7), and a more granular accountant's report in Form 48.

The block ALP option

Section 166(9) carries over section 92CA(3B), which the Finance Act, 2025 inserted with effect from 1 April 2026. It lets a taxpayer ask that the ALP fixed by the TPO for one tax year also apply to similar transactions in the next two tax years.

The TPO must declare the option valid within one month after the end of the month in which it is exercised. Rule 82 sets the conditions. The method, the functions, assets and risks, and the contract terms must not change materially. Form 48 and the return for the first two years must also have been filed on time.

Two cases are excluded:

1. Assessees covered by Chapter XVI-B for any of the three years.
2. Cases where an associated enterprise is in a jurisdiction notified under section 176.

The option is made in Form 46 with an accountant's certificate in Form 47. The CBDT's Form 46 FAQ gives an example: for tax years 2026-27 to 2028-29, Form 46 can be filed up to 30 June 2029.

When the block option is worth considering

The block option suits a stable, recurring transaction, such as a captive service arrangement with unchanged terms. It suits a business that is restructuring, changing its pricing model or adding functions far less well, because Rule 82 requires those features to stay materially the same.

In practice, the decision point is the first-year TPO order. If the order lands at a margin the business can live with, locking it in for two more years may cost less than three separate rounds of litigation.

The new TPO deadline

The Finance Act, 2026 (Act No. 4 of 2026) substituted section 166(7) from 1 April 2026. The TPO must now pass its order before one month prior to the month in which the assessment limitation expires. If limitation ends on 31 March, the order is due by 31 January.

Years under the 1961 Act keep the 60-day count in section 92CA(3A). The same Finance Act inserted section 92CA(3AA) with retrospective effect from 1 June 2007. It fixes the end-date at 30 January, or 31 January in a leap year, where limitation expires on 31 March.

The full dispute path, from TPO reference to the DRP and the ITAT, is covered in our guide to transfer pricing assessment in India.

Worked example: which Act, form and deadline applies to each year?

For an Indian company with a 31 March year end, FY 2024-25 and FY 2025-26 stay under the 1961 Act with Form 3CEB. Tax year 2026-27 moves to the 2025 Act with Form 48, and the TPO deadline switches from the 60-day count to the month-based rule.

Take an illustrative Indian captive IT services subsidiary that files a TP report every year. The table shows how the citations change across the transition.

How the last row works:

1. Tax year 2026-27 ends on 31 March 2027.
2. Under section 286(1), the assessment limit is one year from the end of the following financial year (31 March 2028), so 31 March 2029.
3. A reference to the TPO under section 166(1) adds twelve months under section 286(2)(a): 31 March 2030.
4. Section 166(7) requires the TPO order before the month that is one month prior to March 2030, so by 31 January 2030.

For the 1961 Act rows, 60 days before 31 March 2028 is 31 January 2028 because 2028 is a leap year. In 2029 the same count lands on 30 January, which matches section 92CA(3AA).

The lesson for the tax team is simple. Three consecutive years of the same business can carry different citations and two different deadline rules. Every date in the file should therefore name its governing section.

What should CA firms change in their TP files for tax year 2026-27?

CA firms should run two sets of templates, one for the 1961 Act and one for the 2025 Act, until every pre-2026 year is closed. Most changes are citations, but Form 48, revised engagement letters and the block option create genuinely new work.

1. Split templates by year. Keep 1961 Act templates for FY 2025-26 reports and earlier. Build new templates citing sections 161 to 173 and Rules 78 to 85 for tax year 2026-27.
2. Use dual citations once. In the first tax year 2026-27 report, cite both numbers, for example "section 165 of the Income-tax Act, 2025 (earlier section 92C)". This helps readers and TPOs who move between years.
3. Rewrite the regulatory annexure. Replace "previous year" and "assessment year" with "tax year". Update the rule numbers for methods, range and documentation.
4. Map Form 3CEB data to Form 48. Last year's 3CEB is the closest source for Part C. Form 48 also needs AE-wise IDs and ALP data per transaction in Part E.
5. Revise engagement letters. Name Form 48, section 172 and the 31 October 2027 target date. Add the block option (Forms 46 and 47) as a separate scope item.
6. Carry forward with care. FAR narratives and comparables can roll forward. Citations, form references and the regulatory summary cannot.
7. Track both calendars. FY 2025-26 compliance and open 1961 Act disputes run alongside 2025 Act deadlines. One combined tracker per client avoids a missed date.
8. Flag penalty references. Penalty sections were also renumbered; see our India TP penalties guide before quoting any in an engagement letter.
9. Brief the client's finance team. Explain that transaction-level data for Form 48 must be captured during the year, not reconstructed at filing time.

What are the common mistakes in the transition year, and how do you avoid them?

The most common transition mistakes are citing new-Act sections for FY 2025-26 and treating Form 48 as a renamed Form 3CEB. Another is applying the month-based TPO deadline under section 166(7) to years that are still governed by the 1961 Act. Each one is avoided by checking the governing Act for the year before drafting.

How TAIGA handles the 1961-to-2025 transition

TAIGA, TP Doc Gen AI's transfer pricing platform, runs the study from engagement to filing. The client uploads documents through the IRD wizard, and FAR analysis, benchmarking and a second-reviewer queue follow before final output.

For the transition years, two parts of the platform matter most:

• Living Documents. The TP report is edited in place, and the India study pack is the report plus six annexures, including a TP regulations summary. For FY 2025-26 files, TAIGA produces a Form 3CEB draft for review (PDF, Excel and e-filing JSON layout, not yet a portal upload). For new-Act years, it produces a Form 48 draft under the Income-tax Act, 2025. See Living Documents.
• Range engine. The India range follows the 35th to 65th percentile rule, with the arithmetic mean and tolerance band where there are fewer than six comparables. Every margin, percentile and range is computed in code, never by a language model.

The IRD wizard supports carry-forward from last year's study, so the team can spend its time on citations and new Form 48 fields. The TP Calendar tracks Form 3CEB, Master File and CbCR deadlines across clients.

To see a tax year 2026-27 study built end to end, request a TAIGA demo.

Frequently Asked Questions (FAQs)

Sources and further reading

• Section 166, Income-tax Act, 2025: Reference to Transfer Pricing Officer - Income Tax Department
• Section 165, Income-tax Act, 2025: Determination of arm's length price - Income Tax Department
• Section 172, Income-tax Act, 2025: Report from an accountant - Income Tax Department
• Section 173, Income-tax Act, 2025: Definitions, including "specified date" - Income Tax Department
• Section 536, Income-tax Act, 2025: Repeal and savings - Income Tax Department
• Section 92CA, Income-tax Act, 1961, including sub-sections (3AA) and (3B) - Income Tax Department
• Form No. 48 FAQs - Income Tax Department
• Form No. 46 FAQs - Income Tax Department
• Rule 81, Income-tax Rules, 2026: ALP in certain cases - Income Tax Department
• Rule 82, Income-tax Rules, 2026: Multi-year ALP option - Income Tax Department
• Section 263, Income-tax Act, 2025: Return of income - Income Tax Department
• Key changes in IT Rules 2026: transfer pricing aspects - RSM India

Disclaimer

This article is provided for general informational and educational purposes only. It is not legal, tax, financial or professional advice and should not be relied upon as such. Tax laws, rules and official guidance change frequently, and the position described here is stated as at 24 October 2026. Before acting, verify the latest position on the relevant official sources, such as the Income Tax Department (incometaxindia.gov.in) and the Central Board of Direct Taxes notifications published there. For advice on your specific circumstances, consult a qualified professional.