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Business, Compliance

You got a transfer-pricing adjustment order. Does the tax bill keep growing?

Your Form 3CEB filing was correct at the time. The department raised the price anyway, and what happens next turns on one date: whether you accepted the order or are still appealing it.

An assessment has raised the price your Indian company should have charged its overseas parent, a transfer-pricing adjustment on top of your Form 3CEB filing. This isn't about whether the filing itself was right; it's about what happens after an assessment decides the pricing wasn't arm's length after all, specifically, whether the extra tax is the end of it or keeps compounding for as long as that money sits abroad instead of coming home.
Last reviewed: 6 September 20265 min readReviewed by Preetesh Maloo, CA

The short answer

Unrepatriated "excess money" from a transfer-pricing adjustment over ₹1 crore is deemed a perpetual advance to your overseas parent under Section 92CE(2), carrying notional interest every year until it actually comes home. The 90-day window to repatriate it starts from the date the adjustment order becomes final: immediately if you accept it, or only once your appeal is finally decided if you're contesting it, so an order under appeal hasn't used up any of your 90 days. Section 92CE(2A) offers a way out: pay a one-time additional tax of about 21% (18% plus current surcharge and cess) on the unrepatriated amount instead, and the exposure closes for good, no ongoing secondary adjustment, no compounding interest.

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Does the 90-day clock start now? It depends whether you appealed

The order didn't just raise your tax bill for the year assessed, it starts a clock on repatriating the money too, and getting the trigger date wrong is the easiest way to lose the 90 days without realising it.

Accept the adjustment, pay the extra tax and don't appeal, and the 90-day window runs from the date of that order itself. Appeal it instead, and the order isn't final yet, so the clock doesn't start until the appeal is finally decided, whether that's the Commissioner (Appeals), the Tribunal, or further up. An order you're actively appealing hasn't used up any of your 90 days, but the day the appeal is decided against you, the clock starts immediately, so it's worth knowing in advance which route your CA plans to take if the appeal doesn't go your way.

Three ways this can go, and what each one costs

Once the clock is running, there are three real options:

RouteWhat it costsHow long the exposure lasts
Repatriate within 90 days (of the order, or of the appeal's outcome)Just the original adjustmentClosed once the money's back
Do nothingNotional interest under Rule 10CB, every yearOpen-ended
Elect the Section 92CE(2A) taxOne-time ~21% on the unrepatriated amountClosed the day you pay it

Most advice on transfer-pricing adjustments stops at the first row, actually sending the money back, and skips the third. Section 92CE(2A) lets you instead pay a one-time additional tax, about 21% once surcharge and cess are added, on the amount you're not repatriating; pay it, and the ongoing secondary adjustment and its compounding notional interest stop for good. Whether that's cheaper than actually repatriating depends on what the money is worth staying invested abroad versus the one-time tax, worth running as an actual comparison rather than assumed.

What goes wrong without a CA

The recurring mistake is treating the adjustment order as a one-time tax bill and moving on, with nobody diarising the 90-day clock or its exact trigger date. By the time someone notices the money never came back, the notional interest has usually already been accruing for a year or more, and by then the Section 92CE(2A) election can stop it going forward, but it can't undo the interest that already accrued.

What's involved

What the CA actually does

  1. 1

    We pin down your exact 90-day deadline

    We confirm whether your order is final or under appeal, and calculate the exact date your 90-day repatriation window opens or has already opened, so the clock isn't missed by assuming the wrong trigger date.

  2. 2

    We run the actual repatriate-vs-elect numbers

    We compare the cost of actually repatriating the money against electing the Section 92CE(2A) one-time tax, on your real numbers, before you commit to either.

What to have ready

Documents you'll typically need

  • The transfer-pricing adjustment order itself, and its date
  • Your appeal filing and current status, if you're contesting the order
  • Your original Form 3CEB filing and transfer-pricing documentation for the year assessed
  • Records of the overseas parent's outstanding balance since the adjustment

References on this page

  • Section 92CE(2), Income-tax Act 1961: a primary transfer-pricing adjustment over ₹1 crore not repatriated within 90 days of the adjustment order attaining finality is deemed a perpetual advance to the associated enterprise, carrying notional interest under Rule 10CB
  • Section 92CE(2A): a one-time additional tax of 18% (approx. 20.97% with current surcharge and cess) on the unrepatriated amount, elected instead of ongoing secondary adjustment, closes the exposure permanently
  • Rule 10CB, Income-tax Rules 1962: computation of the notional interest on unrepatriated excess money
  • Section 92E, Income-tax Act 1961: the underlying Form 3CEB accountant's report this adjustment follows from

Frequently asked questions

Common questions

Only if you're accepting it. Accept the order and the 90 days run from its date. Appeal it instead, and the clock waits until the appeal is finally decided, so you haven't already used up any of your 90 days.

Yes, under Section 92CE(2A). It's a one-time election rather than an ongoing bill, once you pay it, the secondary adjustment and notional interest stop for good.

The difference between the price the department decided was arm's length and what your company actually charged or was charged, to the extent it's over ₹1 crore for the year. Below that ₹1 crore threshold, Section 92CE's secondary adjustment doesn't apply at all, only the primary tax adjustment does.

Got a transfer-pricing adjustment order for your Indian company?

Tell us the order date and whether you're appealing it. A practising CA will confirm your exact 90-day deadline and run the numbers on repatriating versus electing the one-time tax, on a free call, no obligation.

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