India: Transfer pricing changes in final Income-tax Rules, 2026
CBDT finalizes rules with updates to safe harbor, APA process, and transfer pricing compliance effective April 2026.
The Central Board of Direct Taxes (CBDT) on March 20, 2026, notified the final Income-tax Rules, 2026 in relation to the Income-tax Act, 2025. The final rules will become effective April 1, 2026.
From a transfer pricing perspective, the final rules mirror the draft rules (which were released for public consultation on February 8, 2026) including the significant rationalization of the safe harbor regime, the measures to expedite the advance pricing agreement (APA) process, and other changes concerning enhanced transfer pricing compliance standards.
However, the final rules incorporate the following key changes compared to the draft rules:
- Safe harbor rules regarding one-time threshold testing, withdrawal timelines, and enhanced disclosure requirements in the prescribed form (Form No. 49)
- APA rollback applicable only if the return of income is filed on or before the original prescribed due date under the Act
- Certain changes in Form No. 48 (which would replace the existing Form No. 3CEB) concerning the disclosure of arm’s length price determination of the transactions covered under an APA and greater clarity through detailed frequently asked questions (FAQs) and guidance notes
Read a March 2026 report prepared by the KPMG member firm in India