Income Tax - Transfer Pricing

Section 92F of Income Tax Act 1961: Definitions for Arm's Length Price

Section 92F defines important expressions used in the transfer-pricing provisions of the Income-tax Act, 1961, including "arm's length price", "enterprise", "permanent establishment", "specified date" and "transaction".

Law transition from 1 April 2026: The Income-tax Act, 2025 applies to Tax Year 2026-27 and later tax years. The Income-tax Act, 1961 continues to govern earlier periods and proceedings preserved under the transition provisions. The corresponding definitions for the new transfer-pricing regime are contained in Section 173 of the Income-tax Act, 2025. Accordingly, Section 92F remains relevant when the 1961 Act governs the relevant period or proceeding.

What does Section 92F cover?

For the purposes of Sections 92, 92A, 92B, 92C, 92D and 92E of the Income-tax Act, 1961, Section 92F supplies definitions that apply unless the context otherwise requires. These provisions form the core of the 1961 Act's transfer-pricing framework for international transactions and specified domestic transactions.

The definitions help determine who or what falls within the transfer-pricing rules, what an arm's length price means, and how broadly a transaction may be understood.

Definitions under Section 92F

Accountant - clause (i)The term "accountant" has the same meaning as assigned to it in the Explanation below Section 288(2) of the Income-tax Act, 1961.
Arm's length price - clause (ii)An arm's length price is a price applied, or proposed to be applied, in a transaction between persons other than associated enterprises in uncontrolled conditions. In practical terms, the concept looks to pricing between independent parties rather than pricing influenced by an associated-enterprise relationship.
Enterprise - clause (iii)An "enterprise" means a person, including a permanent establishment of that person, who is, has been, or is proposed to be engaged in specified commercial or economic activities. The statutory definition extends to activities involving goods, intellectual property and commercial rights, data and technical material, services, contractual work, investments, loans, and dealings in shares, debentures or other securities. It applies whether the activity is carried on directly or through units, divisions or subsidiaries and whether they are located at the same or different places.
Permanent establishment - clause (iiia)For this definition, "permanent establishment" includes a fixed place of business through which the business of the enterprise is wholly or partly carried on.
Specified date - clause (iv)The "specified date" means the date one month before the due date for furnishing the return of income under Section 139(1) for the relevant assessment year.
Transaction - clause (v)A "transaction" includes an arrangement, understanding or action in concert, whether or not it is formal or in writing and whether or not it is intended to be enforceable by legal proceedings.

Why are the Section 92F definitions important?

Transfer-pricing provisions depend on defined terms. The meaning of "arm's length price" provides the benchmark for pricing covered transactions, while the broad meanings of "enterprise" and "transaction" help identify the relationships and arrangements to which the statutory framework can apply. The definition of "specified date" is also relevant to compliance timelines under the 1961 Act.

These definitions should be read together with Section 92A on associated enterprises, Section 92B on international transactions, Section 92C on computation of arm's length price, Section 92D on transfer-pricing records and Section 92E concerning the accountant's report.

Corresponding provision under the Income-tax Act 2025

For Tax Year 2026-27 onward, the transfer-pricing provisions have been reorganized under the Income-tax Act, 2025. Section 173 is the corresponding provision dealing with definitions relevant to determination of arm's length price. It contains definitions of arm's length price, enterprise, permanent establishment, specified date and transaction for the relevant provisions of the 2025 Act.

Under the 2025 Act, "specified date" refers to the date one month before the due date for furnishing the return under Section 263(1) for the relevant tax year. The new Act's transfer-pricing framework includes Sections 161 to 173, including determination of arm's length price under Section 165 and documentation and reporting provisions under Sections 171 and 172.

Official resources

For current compliance and forms, refer to the Income Tax Department e-Filing Portal. The Department provides separate forms and guidance for the Income-tax Act, 1961 and the Income-tax Act, 2025. For the enacted legislation and subsequent amendments, refer to the Legislative Department, Ministry of Law and Justice.

This article is intended as a statutory reference and general information. For a transaction-specific position, read the applicable Act, Rules, notifications and relevant treaty provisions for the period concerned.