Summary
The Government of India – Ministry of Finance / Central Board of Direct Taxes (CBDT) published the Finance Bill, 2026 as introduced in the Lok Sabha on February 1, 2026, outlining amendments to the Income-tax Act, 1961 and Income-tax Act, 2025 relating to transfer pricing assessment procedures and timelines. The Bill amends key provisions governing transfer pricing officers’ (TPOs) orders and the reference process for international and specified domestic transactions, including clarification of time limits for issuance of TPO orders under the new Income-tax Act, 2025, and other structural changes to transfer pricing assessment provisions under the legacy Act. These amendments form part of the direct tax proposals for the 2026–27 fiscal year.

Key points

Amendment to Section 166 – Reference to Transfer Pricing Officer
Under Clause 44 of the Finance Bill, 2026, Section 166 of the Income-tax Act, 2025 is amended to clarify the timing for TPO orders where a reference has been made for computation of arm’s length price for an international transaction or specified domestic transaction. The amendment specifies that the TPO must make the order at any time before one month prior to the month in which the period of limitation for making the assessment, reassessment, or recomputation expires. This replaces the previous requirement that an order be made sixty days before the expiry of the limitation period.

Amendment to Section 92CA – Transfer Pricing Officer Power Reference
Clause 4 of the Finance Bill, 2026 inserts a new subsection into Section 92CA of the Income-tax Act, 1961, broadening procedural aspects relating to transfer pricing references. Although the inserted text covers multiple procedural elements, the core change is to align transfer pricing reference processes and definitions with the updated statutory framework and to ensure that requisite definitions and procedures are formally codified.

Retrospective Clarification of Assessment Timeline and Validity of Orders
Separately, other clauses in the Finance Bill clarify that assessments and orders shall not be invalidated solely due to errors or omissions in computer-generated Document Identification Numbers (DINs), and clarify procedural timelines for assessments, including block assessments and assessments under section 144C. These provisions impact transfer pricing assessments where references are made to the TPO under the broader assessment framework.

Source
Government of India – Ministry of Finance / Central Board of Direct Taxes, THE FINANCE BILL, 2026 (as introduced in Lok Sabha on February 1, 2026)
https://incometaxindia.gov.in/Budgets%20and%20Bills/2026/Finance_Bill-2026.pdf

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Disclaimer:
This content is for general informational purposes only and does not constitute professional advice.
Information provided herein is based on publicly available sources as of the publication date and may be subject to change.

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