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CA Final · Direct Tax Laws & International Taxation · Transfer Pricing

For a tax year, the limitation period for making the assessment order against Sarvam Pharma Ltd. expires on 31st March of a year. A reference was made to the TPO under section 166(1). As per section 166(7) of the Income-tax Act, 2025 (as substituted w.e.f. 1-4-2026), by when must the TPO pass the order under section 166(6)?

The TPO must pass the order on or before 31st January of that year. Section 166(7), as substituted from 1-4-2026, requires the order before one month prior to the month of limitation expiry, and for a 31st March expiry it specifies 31st January. The earlier sixty-day rule has been replaced.

  1. AOn or before 31st January of that yearCorrect
  2. BOn or before 31st December of the preceding year
  3. COn or before 29th February of that year
  4. DOn or before 31st March of that year

Explanation

Section 166(7) requires the order to be made at any time before one month prior to the month in which the limitation period expires. Where the period expires on 31st March, the TPO order is due on or before 31st January of that year. The old rule of sixty days before expiry no longer applies.

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