Introduction
Streamlining APA and Transfer Pricing has become crucial under the evolving Indian tax regime. Clause 169 of the Income Tax Bill, 2025 proposes significant changes to Section 92CD of the Income-tax Act, 1961. This aims to reduce disputes and simplify compliance for taxpayers entering Advance Pricing Agreements (APA).
Key Points:
- Modified return ensures consistency with APA terms.
- Taxpayers pay tax based on updated return.
What Changes Does Clause 169 Bring?
Clause 169 of the 2025 Bill tweaks Section 92CD to make the process cleaner and faster:
| Current Rule (pre-2025) | New Rule (proposed in 2025) |
|---|---|
| Mandatory modified return even if it caused operational delays. | Relaxed procedure for quicker APA adoption. |
| No clarity on tax collection timing after modified return. | Specific provisions for timely tax collection post APA filing. |
| Complex language confusing taxpayers. | Simplified wording to avoid compliance errors. |
Why This Matters for Indian Businesses
- Faster APA rollouts mean quicker dispute resolution with the tax authorities.
- Better cash flow management with clearer tax liability timelines.
- Reduced litigation as APA terms are legally synchronized across assessment years.
Legal References
- Clause 169, Income Tax Bill, 2025 (official draft).
- Section 92CD, Income-tax Act, 1961 (current law).
- CBDT APA FAQs and Annual Reports.
- Supreme Court observations on APA relevance in D.B. Power Ltd v. DCIT.
Proactive Filing:
Once your APA is finalized, immediately prepare your modified returns. Don’t wait for scrutiny notices — filing early under Section 92CD can save interest costs and avoid penalty risks.