Rule 111: APA rollback conditions and additional fee
Rule 111 allows an APA to include rollback treatment for qualifying preceding years, subject to specific conditions and exclusions. It requires the same international transaction, the prescribed filings and request, and an additional fee of ₹5 lakh.
Official notified Income-tax Rules, 2026Need advice on Rule 111?
This article is for general information. Read the official Rules and applicable Act amendments, including the Taxation and Other Laws (Amendment) Act, 2026. If you need professional advice for your situation, contact Bizeneed.
On this page
- Bare law
- Match the same transaction and eligible rollback years
- Check timely returns, reports and the full-year request
- A disposed Tribunal appeal can exclude the year
- Rollback cannot reduce declared income or increase loss
- Use the agreed manner consistently and pay the additional fee
- Plan implementation after agreement
- Key takeaways
- Practical checklist
- FAQs
- Glossary
- Official sources
Bare law
Rule 111 - Roll back of Agreement
(1) Subject to the provisions of this rule, the agreement may provide for determining the arm's length price in relation to an international transaction, or specify the manner in which such arm‘s length price shall be determined during the rollback year (herein referred to as the rollback provision).
(2) The rollback provision shall be subject to the following: — (a) the international transaction is same as the international transaction to which the agreement (other than the rollback provision) applies; (b) the return of income for the relevant rollback year has been or is furnished by the applicant within the time specified in section 263(1)(c); (c) the report in respect of the international transaction had been furnished within the time specified in clause (b); (d) the applicability of rollback provision, in respect of an international transaction, has been requested by the applicant for all the rollback years in which the said international transaction has been undertaken by the applicant; and (e) the application seeking rollback in Form No. 51 has been made in accordance with sub-rule (5).
(3) Irrespective of anything contained in sub-rule (2), the rollback provision shall not be provided in respect of an international transaction for a rollback year, if— (a) the determination of arm's length price of the said international transaction for the said year has been subject matter of an appeal before the Appellate Tribunal and the Appellate Tribunal has passed an order disposing of such appeal at any time before signing of the agreement; or (b) the application of rollback provision has the effect of reducing the total income or increasing the loss, as the case may be, of the applicant as declared in the return of income of the said year.
(4) Where the rollback provision specifies the manner in which arm's length price shall be determined in any rollback year, then such manner shall be the same as the manner which has been agreed to be provided for determination of arm's length price of the same international transaction to be undertaken in any tax year to which the agreement applies, not being a rollback year.
(5) The applicant may, if he desires to enter into an agreement with rollback provision, furnish along with the application, the request for the same in Form No. 51 with proof of payment of an additional fee of ₹ 500000.
Rule breakdown
Match the same transaction and eligible rollback years
The rollback transaction must be the same international transaction to which the agreement’s non-rollback provisions apply. The separate Rule 103 definition limits the possible rollback period.
Prepare a year-wise matrix of transactions and facts; rollback is not automatic coverage of every earlier group arrangement.
Check timely returns, reports and the full-year request
The rule requires the relevant return within the stated section 263(1)(c) time and the transaction report within the time specified in that clause. Verify the applicable current filing provisions and actual acknowledgments.
The request must cover all rollback years in which the transaction was undertaken, and the prescribed Form 51 request must accompany the application. Do not select only favourable qualifying years while ignoring the rule’s all-years condition.
A disposed Tribunal appeal can exclude the year
Rollback is unavailable if the transaction’s arm’s-length determination for that year was the subject of an Appellate Tribunal appeal and the Tribunal disposed of it before the agreement was signed.
Review the issue, year and order date. Mere reference to a pending dispute is not a substitute for the exact statutory test.
Rollback cannot reduce declared income or increase loss
The rule bars rollback where its application reduces total income or increases the loss declared in the return for that year. Compare the proposed result with the filed position before seeking coverage.
Document this check independently of whether the proposed method appears commercially reasonable.
Use the agreed manner consistently and pay the additional fee
If rollback specifies a method of determining the price, it must be the same manner agreed for the same transaction in the agreement’s non-rollback years.
The Form 51 rollback request is accompanied by proof of an additional ₹5 lakh fee. This is additional to the main application fee, not a replacement.
Plan implementation after agreement
The rollback terms must also be implemented through the separate Rule 117 process, including the applicable modified return and covered-appeal requirements.
Retain the year-wise eligibility evidence, request, fee proof and final agreed terms for that implementation review.
Key takeaways
Same transaction required
Match rollback and forward agreement scope.
All applicable rollback years
The request must meet the stated all-years condition.
Specific exclusions
Check Tribunal disposal and the declared-income/loss comparison.
Additional ₹5 lakh
Attach payment proof with the Form 51 request.
Practical checklist
- Prepare a year-wise transaction and filing matrix.
- Check Tribunal orders before signing.
- Compare proposed results with declared income or loss.
- Attach the request and additional-fee evidence.
Avoid
- Do not assume every preceding year is automatically eligible.
- Do not confuse requesting rollback with completing its implementation.
FAQs
Can rollback reduce income declared in the relevant return?
The rule excludes rollback if it reduces declared total income or increases the declared loss.
Is the ₹5 lakh fee instead of the normal application fee?
No. It is expressly an additional fee for the rollback request.
Can a different method be chosen only for rollback years?
Where the manner of price determination is specified, sub-rule (4) requires the same manner as agreed for the same transaction in non-rollback years.
Glossary
- Rollback provision
- The agreement term determining the price or its determination manner for an eligible preceding rollback year.