Transactions with non-cooperative jurisdictions: treated as international transactions, triggering transfer pricing scrutiny and denial of deductions.
Clause 176 creates a regime for transactions with persons in notified jurisdictional areas: government notification power; deeming parties as associated enterprises and transactions as international transactions for transfer pricing; disallowance of deductions absent prescribed authorisation and documentation; deeming unexplained receipts as assessable income; and mandatory higher withholding on payments to NJA persons, with broad definitions and anticipated procedural rules similar to Rule 21AC.

Anti-avoidance in securities transactions deems income to the economic owner to prevent dividend and bonus stripping abuse.
Clause 175 establishes a deeming regime that treats dividends and interest received by an interposed holder as the income of the original economic owner where securities are transferred and subsequently reacquired, limits taxpayer liability where similar securities are acquired, apportions income for partial-year beneficial interest holders, provides exceptions if the taxpayer proves absence of avoidance, disallows losses from dividend and bonus stripping within prescribed acquisition and disposal windows, and treats disallowed bonus-related losses as cost adjustments for retained units.

Deeming of income transferred to non-residents prevents tax avoidance by treating economic beneficiaries as taxable residents.
Clause 174 applies where a transfer of assets, before or after commencement, results in income payable to a non-resident, and where the transfer alone or with associated operations confers on any person rights that give the power to enjoy that income. Such income is deemed to be that person's income for all purposes; related capital sums are treated to prevent disguise as non-taxable receipts. Exceptions exist for bona fide commercial transactions, with the taxpayer bearing the burden to satisfy the assessing authority.

Arm's length price principle reaffirmed and clarified in revised transfer pricing definitions, with expanded enterprise and transaction scope.
Clause 173 of the Income Tax Bill, 2025 restates and refines transfer pricing definitions: arm's length price as the benchmark between independent parties in uncontrolled conditions; an expansive definition of "enterprise" covering goods, IP, services, contracts, investments and securities (directly or via units/subsidiaries); "permanent establishment" as a fixed place of business; and "transaction" to include informal or non enforceable arrangements. The clause updates the "specified date" cross reference to the Bill's return filing provision and adopts more itemised drafting while maintaining substantive continuity with Section 92F.

Accountant's report requirement: certified transfer pricing reporting mandated for international and specified domestic transactions, with prescribed form and timing.
Clause 172 requires every person entering into an international or specified domestic transaction in a tax year to obtain and furnish, by the specified date, a report from an accountant in the prescribed form, signed and verified as prescribed, setting forth such particulars as may be prescribed; the clause makes the obligation statutory, preserves applicability across taxpayer categories, and defers procedural form, verification and timing details to subordinate legislation while maintaining continuity with the existing reporting mechanics.

Transfer pricing documentation: contemporaneous records required and rapid furnishing on demand to enhance transparency and enforcement.
Clause 171 mandates maintenance and furnishing of prescribed transfer pricing documentation by persons entering into international or specified domestic transactions and by constituent entities of international groups, while delegating the specific content, retention periods, thresholds and filing procedures to rules. It enshrines a ten day furnishing requirement with possible extension, cross references definitions to the Bill's reporting provisions, and anticipates master file, local file and country by country reporting formats, thereby consolidating and modernising existing documentary obligations.

Secondary adjustment: statutory deemed advance and repatriation rule with alternative option to pay additional tax in lieu of interest.
Clause 170 mandates secondary adjustment where a primary transfer pricing adjustment of a prescribed monetary threshold increases income or reduces loss and excess money is not repatriated within the prescribed time; unrepatriated excess is deemed an advance to any non-resident associated enterprise and attracts notional interest computed as prescribed, with an alternative statutory option to pay an additional income-tax that is final and bars further credit or deduction.

Advance Pricing Agreement application: modified returns must align tax assessments with agreed transfer pricing terms and timelines.
The statutory mechanism requires taxpayers to furnish a modified return limited to APA-impacted items within a prescribed post-agreement period, treats that filing as a return for assessment purposes, and directs assessing officers to modify completed assessments or complete pending proceedings in accordance with the APA; designated limitation and deeming provisions clarify timelines and the status of proceedings to ensure retrospective yet circumscribed implementation of the APA.

Advance pricing agreements secure pre determination of arm's length pricing to enhance transfer pricing certainty and reduce disputes.
Clause 168 preserves the APA framework by empowering the Board, with Central Government approval, to determine the arm's length price or manner of attributing income to India for international transactions; to specify statutory and rule based methods (with adjustments); to make APAs prevail over general transfer pricing provisions; to bind both taxpayers and tax authorities for covered transactions; to permit rollback for prior years; and to declare APAs void ab initio for fraud or misrepresentation, with corresponding limitation period consequences and scheme making authority for procedural rules.

Safe harbour rules mandate acceptance of declared transfer prices and deemed income, delivering taxpayer certainty while limiting administrative discretion.
Clause 167 empowers the Board to prescribe safe harbour rules under which income-tax authorities shall accept the transfer price or deemed income declared by the assessee for transactions falling within section 9(2) and arm's length price provisions, creating a statutory presumption that reduces administrative discretion and dependency on detailed rule-making to specify eligibility, thresholds, documentation, and procedural requirements.

Arm's length pricing: multi year ALP option expands certainty and permits roll forward of transfer pricing determinations.
Clause 166 authorises the Assessing Officer to refer international and specified domestic related party transactions to a Transfer Pricing Officer for determination of the arm's length price, subject to prior approval; mandates notice, hearing, prescribed transfer pricing methods, and communication of the TPO order to AO and assessee; empowers the TPO to examine unreported transactions and to validate a taxpayer's option to apply a determined ALP to similar subsequent years, with rectification powers and corresponding AO amendment obligations, and permits issuance of Board guidelines to implement the multi year regime.

Arm's length price determination: new clause refines methods and AO powers, emphasizing documentation and prescribed procedures.
Determination of Arm's Length Price requires selecting the most appropriate method from prescribed alternatives based on the transaction's nature, associated enterprise class, and functional analysis; where a single comparable price is found it is the arm's length price subject to a prescribed tolerance, while multiple prices must be reconciled in a prescribed manner. The tax authority may determine ALP during assessment if methods were not followed or documentation is inadequate, but must issue a show cause notice before adjustment; adjustments permit recomputation of total income and restrict deductions on enhanced income, with safeguards to prevent double adjustment.

Specified domestic transaction: extending transfer pricing to high-value related-party domestic dealings, subject to arm's length compliance.
Clause 164 defines specified domestic transaction by enumerating categories of non-international related-party dealings brought under transfer pricing when aggregate annual value exceeds a high-value threshold, includes a residual prescription power to notify additional transactions, and requires contemporaneous documentation and benchmarking to ensure compliance with the arm's length principle.

International transaction scope expanded broadens transfer pricing coverage to intangibles and indirect dealings, including restructuring and financing arrangements.
Clause 163 defines international transaction expansively to include tangible and intangible property (expressly including transfer), capital financing, services, business restructuring, cost sharing and any transaction affecting profits, income, losses or assets; it reproduces an illustrative list of intangibles and contains a deeming rule treating dealings with third parties as international transactions where terms are determined with or pursuant to an associated enterprise, thereby widening transfer pricing coverage and anti avoidance reach.

Associated enterprise definition expands transfer pricing scope to include specified domestic transactions and indirect control.
Clause 162 defines associated enterprise through a general limb covering direct or indirect participation in management, control or capital and a list of deeming provisions-equity thresholds, significant loans and guarantees, board control, dependence on intangibles, supply and sales dependence, and familial/HUF control-while expressly extending the concept to specified domestic transactions and retaining prescribed catch-all and subjective influence tests that may require further guidance.

Arm's length price requirement drives transfer pricing adjustments to prevent profit shifting and protect the tax base.
Clause 161 mandates computation of income and the allowance of expenses or interest for international and specified domestic transactions among associated enterprises with reference to the arm's length price, requires arm's length allocation for shared costs or services, and prohibits transfer pricing adjustments that would reduce taxable income or increase losses, thereby strengthening scrutiny of intra group cost allocations and deductions to prevent profit shifting.

Unilateral double taxation relief limits credit to the lower of domestic or foreign tax rates and requires proof of foreign tax payment.
Clause 160 provides unilateral relief for Indian residents and non-resident partners taxed on foreign income where no DTAA exists, limited to the lower of the Indian tax rate or the foreign tax rate, requires proof of foreign tax payment, and defines key terms to include excess profits or business profits taxes; it modernizes terminology and omits a prior country-specific carve-out, while raising evidentiary and computational ambiguities.

Double taxation relief framework modernised: new clause clarifies treaty adoption, anti abuse safeguards, and documentation requirements.
Clause 159 empowers the Central Government to enter into and adopt agreements with foreign countries and notified specified territories, and permits specified domestic associations to enter into sectoral agreements subject to governmental adoption and notification. Agreements may provide relief from double taxation, avoidance of double taxation constrained by anti abuse safeguards, exchange of information to prevent evasion, and mutual assistance in tax recovery. The Act's provisions apply to the extent more beneficial to the taxpayer, but anti abuse measures in Chapter XI apply notwithstanding such benefit. Non residents must furnish a certificate of residence and prescribed documentation to claim treaty relief.

Treaty interpretation and anti-abuse primacy clarified: government may adopt association agreements while preserving treaty benefit limits.
Clause 159 authorises the Central Government to enter into agreements with foreign countries or notified territories and to adopt agreements between notified specified associations for double taxation relief, exchange of information, and mutual assistance in recovery. Taxpayers may claim the more beneficial of domestic law or a notified agreement, subject to documentary requirements for non-residents and the primacy of chapter-level anti-abuse provisions. A four-tier interpretive hierarchy for treaty terms is provided, with retrospective effect from the agreement's commencement.

Relief from taxation on foreign retirement accounts aligns Indian tax timing with foreign withdrawal taxation to prevent double taxation.
Clause 158 aligns Indian taxation of income from foreign retirement accounts with the foreign tax event by restricting relief to specified accounts in notified countries opened while the taxpayer was non resident, and by delegating timing and procedural details to rules to prevent double taxation, address timing mismatches, and guard against abuse.