Section 169 Income Tax Act 2025: How Does an APA Affect Tax Returns?

Section 169 gives effect to an advance pricing agreement (APA) by permitting or requiring returns to reflect the agreement and by specifying how completed and pending assessments must be handled. The Finance Act, 2026 extended the return mechanism to associated enterprises in defined circumstances.

Current law: Section 169 of the Income-tax Act, 2025, as amended by the Finance Act, 2026 with effect from 1 April 2026. It corresponds broadly to Section 92CD of the Income-tax Act, 1961. The amendment to Section 169(1) is important: an associated enterprise may also file a return or modified return when income is modified as a result of the APA.

What happens after an advance pricing agreement is signed?

An APA under Section 168 can change the income to be reported for tax years covered by the agreement. Section 169 provides a special return-filing and assessment mechanism to give effect to that change. The return must be consistent with, and limited to, the terms of the APA; it is not a general opportunity to revise unrelated items.

Section 169: Subsection-wise explanation

Section 169(1): Return or modified return after APA

Despite Section 263, where income is modified as a result of an APA entered into with a person, that person shall furnish a return or modified return, while another person who is an associated enterprise may furnish a return or modified return. The filing must be in accordance with and limited to the agreement and relate to the tax years covered by it.

The filing period is three months from the end of the month in which the APA was entered into. The associated-enterprise option was introduced by substitution of subsection (1) through the Finance Act, 2026, effective 1 April 2026. It aims to address consequential income changes, including possible double taxation involving associated enterprises.

Section 169(2): Application of other provisions

Except to the extent specifically provided by Section 169, the other provisions of the Act apply as if the modified return were a return furnished under Section 263. Filing under the APA mechanism does not displace other applicable legal obligations.

Section 169(3)(a): Assessment or reassessment already completed

Where relevant proceedings were initiated before filing the modified return and were already completed before that filing, the Assessing Officer must pass an order modifying the total income for the relevant tax year in accordance with the APA.

Section 169(3)(b): Assessment or reassessment still pending

Where those proceedings remain pending when the modified return is filed, the Assessing Officer must complete them in accordance with the APA, taking the modified return into consideration.

Section 169(4)(a): Deadline to modify a completed assessment

The order in a case under Section 169(3)(a) must be passed within one year from the end of the financial year in which the modified return is furnished, notwithstanding the ordinary time-limit provisions referred to in Section 169(4).

Section 169(4)(b): Additional time for pending proceedings

For pending proceedings under Section 169(3)(b), the relevant limitation period under Sections 275, 286 or 296 is extended by twelve months.

Section 169(5): Meaning of agreement and completed proceedings

For Section 169, an agreement means an APA referred to in Section 168(1). Proceedings are deemed completed where an assessment or reassessment order has been passed, or no notice under Section 270(8) was issued before the applicable limitation period expired.

Important deadlines at a glance

Event	Time limit
Return or modified return under Section 169(1)	Three months from the end of the month of APA execution
Order modifying completed assessment	One year from the end of the financial year in which modified return is furnished
Pending assessment or reassessment	Relevant statutory limitation extended by twelve months

Relevant statutory concepts

Advance pricing agreement (APA): An agreement under Section 168(1) determining the arm's length price or its method for covered international transactions, or specified income attributable to Indian operations of a non-resident.

Associated enterprise: An enterprise satisfying the statutory relationship conditions under Section 162.

Modified return: A return furnished to reflect the APA for covered tax years, in accordance with and limited to the agreement under Section 169.

Tax year: The period relevant to computing income under the Income-tax Act, 2025; the particular tax years must be covered by the APA.

Assessing Officer: The income-tax authority exercising assessment powers under the Act; Section 169 directs how the officer must implement an APA in covered proceedings.

Practical example: Filing deadline after an APA

Illustration: An Indian company enters into an APA on 12 August 2026 covering certain tax years. If the agreement changes income for those years, the company must furnish the applicable return or modified return by 30 November 2026, three months after the end of August. An associated enterprise whose income is affected may also use Section 169(1), subject to the statutory conditions.

If an assessment for a covered year was already completed before the modified return was filed, the Assessing Officer must pass the consequential modification order within the statutory one-year period. If the assessment is still pending, the officer must consider the modified return and the applicable twelve-month extension.

Note: The illustration assumes a qualifying APA and does not address separate procedural or treaty-specific issues.

Compliance checklist

Identify each tax year and transaction covered by the executed APA.
Check whether income is modified for the APA signatory and any associated enterprise.
Calculate the three-month deadline from the end of the month of execution.
Restrict return changes to matters arising from the agreement.
Identify completed and pending assessment or reassessment proceedings separately.
Retain the APA, calculations, return acknowledgements and relevant assessment records.

Frequently asked questions

Is filing mandatory after an APA changes income?

Section 169(1) says the person entering into the APA shall furnish a return or modified return where income is modified. A qualifying associated enterprise may furnish one.

Can an associated enterprise file a modified return?

Yes. The Finance Act, 2026 substituted Section 169(1) to permit an associated enterprise to file a return or modified return where its income is affected by the APA, in accordance with and limited to the agreement.

What is the filing deadline?

Three months from the end of the month in which the APA is entered into, for the tax years covered by that agreement.

Does the APA reopen every part of a tax return?

No. The special return is confined to the APA. Other provisions of the Act continue to apply, subject to Section 169.

What if assessment proceedings are pending?

The Assessing Officer must complete them in accordance with the APA after considering the modified return. The relevant statutory limitation period is extended by twelve months.

Which provision applied under the Income-tax Act, 1961?

Section 92CD broadly corresponded to Section 169, but the amended 2025 provision should be consulted for tax years governed by the new Act.

Official statutory references

Read Section 169 together with Sections 162, 168, 263, 270(8), 275, 286 and 296, as applicable. The Finance Act, 2026 substituted Section 169(1) with effect from 1 April 2026.

Official Income-tax Act, 2025 (amended)Official Budget 2026 APA FAQs

Last reviewed: 10 November 2026. General legal information; check the current legislation, applicable rules and individual APA terms.