Section 92CD: Effect of Advance Pricing Agreement
Section 92CD of the Income-tax Act, 1961 explains how a signed advance pricing agreement (APA) is given effect through modified income-tax returns and corresponding assessment orders. Its subject is addressed in Section 169 of the Income-tax Act, 2025.
What is an advance pricing agreement?
An advance pricing agreement (APA) is an arrangement under Section 92CC between the Central Board of Direct Taxes, with the prescribed approval, and a taxpayer for determining the arm's length price, or the method of determining it, for covered international transactions. An APA may cover future years and, where eligible, specified rollback years.
Effect to advance pricing agreement means giving practical tax effect to its terms, including modifying returns already filed and adjusting completed or pending assessments.
Section 92CD explained: Subsections (1) to (6)
Section 92CD(1): Modified return within three months
If a person has entered into an APA and had already furnished a return under Section 139 for an assessment year covered by the agreement, that person must furnish a modified return within three months from the end of the month in which the APA was entered into. The changes must be in accordance with and limited to the APA. This is a specific statutory return, not a general opportunity to revise unrelated claims.
Section 92CD(2): Treatment of the modified return
Except as specifically provided by Section 92CD, other provisions of the 1961 Act apply to the modified return as they would to a return furnished under Section 139.
Section 92CD(3): Assessment already completed
If assessment or reassessment proceedings for a covered assessment year were completed before expiry of the period permitted for filing the modified return, the Assessing Officer must, where a valid modified return is filed, pass an order modifying the total income already determined in accordance with the APA. The current official text uses this formulation; older reproductions describing a fresh assessment or reassessment should not be treated as the latest wording.
Section 92CD(4): Assessment still pending
Where assessment or reassessment is pending when the modified return is filed, the Assessing Officer completes those proceedings in accordance with the APA, taking the modified return into account.
Section 92CD(5): Special assessment deadlines
Notwithstanding the specified provisions of Sections 153, 153B and 144C, an order under subsection (3) must be passed within one year from the end of the financial year in which the modified return is furnished. For pending proceedings under subsection (4), the applicable limitation period is extended by twelve months.
Section 92CD(6): Definitions and completed proceedings
For this section, an agreement is an APA under Section 92CC(1). Proceedings are deemed completed where an assessment or reassessment order has been passed, or no notice under Section 143(2) was issued within the prescribed limitation period.
Important deadlines at a glance
| Requirement | Statutory period | Reference |
|---|---|---|
| Filing modified return after APA | Within 3 months from the end of the month of APA execution | 92CD(1) |
| Order modifying completed assessment | Within 1 year from the end of the financial year in which modified return is filed | 92CD(5)(a) |
| Completion of pending assessment | Applicable limitation extended by 12 months | 92CD(5)(b) |
Illustrative example
Suppose an APA is signed on 15 July 2025 and a covered year's return has already been filed. Under Section 92CD(1), the modified return is due 31 October 2025. If it is filed on that date and the relevant assessment was already completed, the one-year period under subsection (5)(a) runs from the end of financial year 2025-26, giving a deadline of 31 March 2027 for the order modifying total income, subject to the applicable law and facts.
How to give effect to an APA in practice
- Identify covered years and transactions: Read the executed APA and any approved rollback provisions.
- Reconcile earlier returns: Determine only the changes attributable to the agreed transfer-pricing treatment.
- Prepare the modified return: Follow the prescribed filing procedure and retain the APA, computations and supporting records.
- Meet the deadline: Calculate the three-month period from the end of the execution month, not the date of signature alone.
- Track assessment status: Determine whether subsection (3) or (4) applies to each covered year.
- Check associated obligations: Review transfer-pricing documentation, accountant reporting and any applicable secondary-adjustment rules.
APA rollback may also involve additional requirements under Rule 10RA of the Income-tax Rules, 1962, including proof of tax payment and resolution of appeals concerning covered issues. Verify the rules applicable to the relevant year.
Section 169 of the Income-tax Act, 2025: Updated legal position
Section 169 corresponds to Section 92CD in the official legislative mapping. It concerns the effect of APAs on returns and assessments for years to which the newer Act applies. The Budget 2026 explanatory FAQs describe an amendment intended to allow an associated enterprise of an APA signatory to furnish a modified return for covered tax years, addressing potential double taxation. Read the enacted provision and its commencement rules before relying on that facility in a specific case.
The APA itself is dealt with under Section 168 of the 2025 Act (corresponding to Section 92CC). The historical Section 92CD rules remain relevant for proceedings relating to years governed by the 1961 Act.
Official statutory text and government guidance
Frequently asked questions
When must an APA modified return be filed?
Under Section 92CD(1), within three months from the end of the month in which the advance pricing agreement is entered into, where a return was already furnished for a covered year.
Can a modified return change unrelated income?
No. The modified return must be in accordance with and limited to the advance pricing agreement.
What if assessment has already been completed?
The Assessing Officer passes an order modifying the assessed total income in accordance with the APA, subject to the applicable statutory conditions and deadline.
What is the corresponding provision in the Income-tax Act, 2025?
Section 169 concerns the effect of advance pricing agreements. Apply the law relevant to the tax year and applicable transitional provisions.
Updated: 26 October 2026. This article is general legal information; the governing tax year, enacted amendments and facts of the APA determine the result.