Rule 82: Multi-year transfer-pricing option and Forms 46–47

Bare law

Rule 82 - Exercise of option for determination of arm's length price for multiple years in a single proceeding

(1) The option or options as per section 166(9)(a) may be exercised by an assessee for determination of arm‘s length price for multiple year in a single proceeding by furnishing Form No. 46 for two consecutive tax years (the second tax year and the third tax year, respectively) immediately following the tax year (the first tax year) in respect of which reference has been made in its case under the said section.

(2) The Form No. 46, in respect of international transactions or specified domestic transactions shall be furnished, within the period, beginning from the end of the third tax year and ending on the 30th June succeeding the third tax year.

(3) Every Form No. 46 furnished in sub-rule (2) shall be accompanied by a certificate from the accountant, as defined in section 515(3)(b), in Form No. 47.

(4) In a case where the international transactions or the specified domestic transactions fulfil the conditions prescribed in sub-rule (5), the Transfer Pricing Officer shall, within one month from the end of month in which such option or options are exercised, pass an order, in writing, declaring whether the option or options exercised in Form No. 46 are valid or invalid.

(5) For the purposes of sub-rule (4) the prescribed conditions are as under, –– (a) the international transactions or the specified domestic transactions (herein referred to as the relevant transactions) in the second and third tax year for which option or options has been exercised in Form No. 46, should be similar to the international transactions or the specified domestic transactions in the first tax year; (b) the relevant transactions shall be treated to be similar, if they satisfy the following conditions: — (i) there is no change in the method to determine the arm‘s length price for the relevant transactions; (ii) the functions performed, taking into account assets employed and the risks assumed, by the parties in respect of the relevant transactions remain materially consistent; (iii) in respect of the relevant transactions, the business activities, the relevant financial, tax, and accounting methods; and classification of the assessee, in case of a company, remained materially the same; (iv) the option or options exercise would be applicable even when there is a change in the business result or holding structure of the associated enterprise, or change in the associated enterprise, provided there is no material change in the relevant transaction and no material change in the functions performed, taking into account assets employed and the risks assumed; and (v) there is no change in the contractual terms (whether or not such terms are formal or in writing) of the relevant transactions, which explicitly or implicitly laid down how the responsibilities, risks and benefits are to be divided between the parties to the relevant transactions. (c) the assessee has furnished in the first and the second tax years, –– (i) report from the accountant under section 172 on or before the specified date referred to in that section; and (ii) return of income on or before the due date referred to in section 263(1); (d) the assessee shall undertake to furnish for the third tax year, –– (i) report from the accountant, as defined in section 515(3)(b), under section 172 on or before the specified date referred to in that section; and (ii) return of income on or before the due date referred to in section 263(1); (e) the case of the assessee for the first, second and the third tax years is not covered under the provisions of Chapter XVI-B; and (f) none of the associated enterprises relevant to the transactions is a resident of a jurisdiction which has been notified under section 176.

(6) If the assessee objects to the order of the Transfer Pricing Officer under sub-rule (4) declaring the option to be invalid, it may file its objections with the Commissioner, to whom the Transfer Pricing Officer is subordinate, within fifteen days of receipt of the order of the Transfer Pricing Officer.

(7) On receipt of the objection referred to in sub-rule (6), the Commissioner shall after providing an opportunity of being heard to the assessee pass appropriate orders in respect of the validity, or otherwise, of the option exercised by the assessee and cause a copy of the said order to be served on the assessee and the Transfer Pricing Officer.

(8) In a case where, during the proceedings under section 166, it is found that the information provided by the assessee in the Form No. 46 is inaccurate or not bona fide or the accountant, as defined in section 515(3)(b), furnishes the certificate in Form No. 47 to the same effect or conditions as specified in sub-rule (5) are not met, the order passed under sub- rule (4) shall be cancelled.

(9) Before cancelling the order passed under sub-rule (4), the Transfer Pricing Officer shall give the assessee a reasonable opportunity of being heard and take the approval from the Commissioner before cancelling the order.

(10) Where the option or options exercised by the assessee, are declared as invalid under sub-rule (4) or the order passed under the said sub-rule is cancelled by the Transfer Pricing Officer, the Transfer Pricing Officer shall proceed to determine the arm‘s length price for the first tax year, for which reference has been received under section 166(1).

Rule breakdown

Key takeaways

Practical checklist

FAQs

Glossary

First tax year

The tax year for which the section 166 reference has been made.

Form 47

The accountant’s certificate accompanying each Form 46 under the rule.

Official sources

• Official notified Income-tax Rules, 2026 — Notification 22/2026