Report from an accountant to be furnished by persons entering into international transaction or specified domestic transaction
[As per the Income Tax Act, 2025 (this Act) w.e.f. 1st April, 2026.]
Every person who has entered into an international transaction or specified domestic transaction during a tax year shall obtain a report from an accountant and furnish such report on or before the specified date in the prescribed form duly signed and verified in the manner as prescribed by such accountant and setting forth such particulars as prescribed.
FAQs on Section 172 of Income Tax Act 2025
What is the purpose of Section 172 of the Income Tax Act, 2025?
Section 172 mandates the furnishing of a report from an accountant by any person who has entered into an international transaction or specified domestic transaction during a tax year. This is done to ensure proper compliance with transfer pricing regulations and disclosure norms.
Who is required to furnish a report under Section 172?
Any person who has entered into an international transaction or a specified domestic transaction during a tax year is required to furnish the report.
What is an international transaction?
An international transaction refers to a transaction between two or more associated enterprises, either or both of whom are non-residents, involving the sale, purchase, lease, provision of services, lending or borrowing of money, or any other dealings having a bearing on profits, income, losses, or assets.
What is a specified domestic transaction?
A specified domestic transaction refers to certain types of transactions between related domestic parties that are subject to transfer pricing provisions due to the potential for tax base erosion.
What is the due date for furnishing the report under Section 172?
The report must be furnished on or before the specified date as prescribed by the rules under the Act. This date typically aligns with the due date for filing the return of income.
In what form should the report be furnished?
The report must be furnished in the prescribed form, duly signed and verified by an accountant in the manner prescribed.
Who is considered an accountant for the purpose of Section 172?
An accountant refers to a chartered accountant as defined under the Chartered Accountants Act, 1949, who is eligible to conduct audits and provide certification under the Income Tax Act, 2025.
Is electronic filing of the report allowed under Section 172?
Yes, the rules may prescribe electronic submission of the accountant’s report, depending on the mechanism laid down by the tax authorities.
What details are required to be included in the report?
The report must set forth particulars as prescribed, which typically include the nature and value of international or specified domestic transactions and whether they have been undertaken at arm’s length prices.
What are the consequences of not furnishing the report under Section 172?
Failure to furnish the report may attract penalties and other consequences under the Income Tax Act, 2025, including potential disallowance of expenses and additional scrutiny by tax authorities.
Can a revised report be submitted if errors are found in the original?
As per general principles, if allowed under the prescribed rules, a revised report may be submitted before the specified date. However, this depends on procedural guidelines issued by the CBDT.
Does Section 172 apply to transactions with unrelated parties?
No, Section 172 specifically applies to international or specified domestic transactions with associated enterprises or related parties as defined under the Act.
Is Section 172 applicable even if there is no income arising from the transaction?
Yes, the obligation to furnish the report is triggered by the existence of an international or specified domestic transaction, irrespective of whether it results in income.
Are there thresholds below which reporting under Section 172 is not required?
The Act or associated rules may prescribe monetary thresholds for specified domestic transactions, below which the provisions of Section 172 may not apply. These must be verified from the official rules.
Is advance pricing agreement (APA) compliance sufficient to skip Section 172 reporting?
Even in cases where an APA exists, the accountant’s report under Section 172 may still be required, although the disclosure would mention the APA coverage.
