Skip to content

CS Professional · Advanced Direct Tax Laws and Practice · Transfer Pricing and General Anti Avoidance Rules (GAAR)

Under the Income-tax Act, 2025 (applicable from the June 2027 session), an advance pricing agreement entered into by the Board with a person can be valid for a period of:

An advance pricing agreement under the Income-tax Act, 2025 is valid for the period specified in it, which cannot exceed five consecutive tax years. The statute sets this ceiling, and the agreement itself fixes the actual period within it.

  1. ANot exceeding five consecutive tax years, as specified in the agreementCorrect
  2. BNot exceeding three consecutive tax years, as specified in the agreement
  3. CExactly ten tax years from the date of the agreement
  4. DAny period decided by the Assessing Officer each year

Explanation

Section 168(4) provides that the agreement is valid for such period, not exceeding five consecutive tax years, as specified in it. The three-year option understates the statutory ceiling. A fixed ten-year term and annual determination by the Assessing Officer have no basis in the text.

Did you get it right without looking?

One question tells you little. A timed set on Transfer Pricing and General Anti Avoidance Rules (GAAR) shows your real accuracy, how long you take and where you lose marks.

Practise Transfer Pricing and General Anti Avoidance Rules (GAAR)Free diagnostic mock

More Transfer Pricing and General Anti Avoidance Rules (GAAR) questions