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Income Tax Law / Transfer Pricing

Section 92CA of Income-tax Act: Reference to Transfer Pricing Officer

A practical guide to the TPO reference procedure, notices, arm's length price determination, time limits, statutory powers and the multi-year pricing option.

Law update (October 2026): Section 92CA is important for matters governed by the Income-tax Act, 1961. The corresponding provision for the Income-tax Act, 2025 is Section 166. The Finance Act, 2025 also introduced the multi-year ALP mechanism; the relevant assessment or tax year and transition provisions determine the applicable rules.
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What is Section 92CA?

Section 92CA of the Income-tax Act, 1961 governs a reference by the Assessing Officer (AO) to a Transfer Pricing Officer (TPO) to determine the arm's length price (ALP) of an international transaction or specified domestic transaction. An ALP is the price that would ordinarily apply between unrelated parties in comparable circumstances. Section 92C prescribes ALP computation methods; Section 92CA governs the referral and determination process.

Section 92CA(1): Reference by the Assessing Officer

If the assessee has entered into an international transaction or a specified domestic transaction, the AO may refer ALP computation to the TPO when necessary or expedient, with the prior approval of the Principal Commissioner or Commissioner. Finance Act, 2025 introduced restrictions on referrals where a valid multi-year ALP option covers the transaction. A reference for a transaction covered by the validated option is treated as not having been made, subject to the statutory conditions.

Section 92CA(2): Notice and evidence

After a valid reference, the TPO must serve a notice asking the assessee to produce evidence supporting its ALP computation. Relevant material may include agreements, invoices, functional and risk analysis, comparable company data, benchmarking studies and records maintained under Section 92D. The taxpayer should respond within the period specified in the notice.

Sections 92CA(2A), (2B) and (2C): Additional transactions

During a TPO proceeding, additional international transactions or specified domestic transactions falling within the applicable amended statutory language may be examined even if not originally referred. Transactions for which the Section 92E report was not furnished may also be examined where statutory conditions are satisfied. Sub-section (2C) preserves the protection against reopening specified completed assessments before 1 July 2012 solely through sub-section (2B).

Section 92CA(3): TPO determination

The TPO considers the taxpayer's evidence, information sought under Section 92D, and other relevant material, then issues a written ALP determination in accordance with Section 92C. Copies are supplied to the AO and the assessee. The determination must follow the applicable method, comparability principles and procedural requirements.

Sections 92CA(3A) and (3AA): Time limit

The TPO order must ordinarily be made at least 60 days before the relevant assessment limitation expires, subject to statutory extensions and exclusions. Sub-section (3AA) addresses calculation of the 60-day period in specified year-end situations. The applicable deadline must be calculated from the particular assessment proceedings, not assumed from a generic calendar date.

Sections 92CA(3B) and (4A): Multi-year ALP option

The Finance Act, 2025 introduced a mechanism for applying an ALP determined for one previous year to similar transactions in the next two consecutive previous years. The assessee must exercise the option in the prescribed form, manner and time. The TPO decides validity within one month from the end of the month in which the option is exercised. Special provisions govern the AO's recomputation and the mechanism does not apply to excluded block assessment proceedings. For tax years under the Income-tax Act, 2025, consult Section 166 and its prescribed rules.

Sections 92CA(4), (5) and (6): Assessment and rectification

The AO computes total income in conformity with the TPO's ALP determination under Section 92CA(3). The TPO can rectify mistakes apparent from the record, applying Section 154 as appropriate, and sends the rectification order to the AO for corresponding amendment of the assessment.

Section 92CA(7) and Explanation: Powers and meaning of TPO

For ALP determination, the TPO may exercise statutory powers under Sections 131(1)(a) to (d), 133(6) and 133A, as applicable. A Transfer Pricing Officer is an authorised Joint Commissioner, Deputy Commissioner or Assistant Commissioner empowered by the Board to perform the specified transfer pricing functions.

Income-tax Act, 2025: Corresponding Section 166

From 1 April 2026, the Income-tax Act, 2025 is the principal enactment for the new tax-year framework, while the 1961 Act and its saving provisions remain relevant for earlier years and pending matters. Section 166 corresponds to Section 92CA and contains the TPO reference, determination, multi-year option, assessment and rectification framework. Other relevant provisions include Sections 165 (ALP computation), 171 (documentation) and 172 (accountant report). Always apply the statute and rules governing the relevant year.

Illustrative transfer pricing case

An Indian company pays its overseas associated enterprise for technical services. The AO refers the transaction to the TPO with the required approval. The TPO issues a notice, reviews the service agreement and benchmarking, hears the assessee and determines an ALP. The AO then computes income consistently with that determination, subject to available statutory remedies. This is an illustration, not a substitute for a case-specific assessment.

Official legislation and guidance

Read the Income Tax Department text of Section 92CA, the Finance Act, 2025 amendment to Section 92CA, the Income Tax Department transfer pricing guidance, and the official section correspondence navigator. Verify applicable notifications and procedural rules before filing.

Legislative history and earlier-year cases

Amendments to Section 92CA include provisions on additional transactions, non-reporting, time limits and rectification. The Finance Act, 2025 inserted the multi-year option under sub-section (3B), associated limits on referrals, and the related recomputation mechanism under sub-section (4A). Earlier amendments and their commencement dates may remain material for disputes concerning earlier assessment years. The original provision also contains protections for certain assessments completed before 1 July 2012 and historic limitation provisions. Consult the statutory text applicable to the relevant year.