My associated enterprise will not send the money back. Can I simply pay tax on it and be done, and if I do, what do I give up?
Yes. Section 92CE(2A) gives the assessee an option, "without prejudice to the provisions of sub-section (2)", where the excess money or part of it has not been repatriated within the prescribed time, to "pay additional income-tax at the rate of eighteen per cent on such excess money or part thereof". The price of that option is stated in the next three sub-sections and it is absolute. Sub-section (2B) makes the payment "the final payment of tax in respect of the excess money or part thereof not repatriated" and provides that "no further credit therefor shall be claimed by the assessee or by any other person in respect of the amount of tax so paid". Sub-section (2C) provides that "No deduction under any other provision of this Act shall be allowed to the assessee in respect of the amount on which tax has been paid in accordance with the provisions of sub-section (2A)". Sub-section (2D) then closes the loop in the taxpayer's favour: once the additional income-tax is paid "he shall not be required to make secondary adjustment under sub-section (1) and compute interest under sub-section (2) from the date of payment of such tax". These four sub-sections were inserted by Act No. 23 of 2019 with effect from 1 September 2019.
Decided by the CBDT Circulars & Instructions (Not applicable — statutory text) on 2019-09-01, reported as Section 92CE(2A) to (2D) of the Income-tax Act, 1961, inserted by Act No. 23 of 2019 with effect from 1 September 2019. It bears on section 92CE, section 92CE(2), section 92CE(2A), section 92CE(2B), section 92CE(2C), section 92CE(2D), section Rule 10CB of the Income Tax Act 1961, in Assessment & Scrutiny and How Tax Law Is Read matters.
The option is usually the commercially sensible answer where the associated enterprise is a foreign parent that will not repatriate, because the alternative is a deemed advance carrying imputed interest under Rule 10CB for as long as the money stays abroad — indefinitely. But the reader must understand three limits before he takes it. First, the tax is on the EXCESS MONEY itself, not on the interest, and eighteen per cent of the whole unrepatriated amount can dwarf a year or two of imputed interest, so the option is worth taking only when repatriation is genuinely not going to happen. The eighteen per cent in the section is not the whole cost. Section 2(4) of the Finance (No. 2) Act, 2019 increases the tax charged under s.92CE(2A) by a surcharge of twelve per cent, and s.2(12) of that Act adds a four per cent Health and Education Cess on the tax and surcharge together, so the effective rate for that year is 20.9664 per cent. Because the surcharge and cess come from the annual Finance Act and not from s.92CE, the rate has to be taken from the Finance Act in force for the year in which the option is exercised. Second, the finality is complete: it is not an advance payment of anything, no credit can be taken by the assessee or by any other person — which means the associated enterprise cannot claim it either — and no deduction is allowed anywhere else in the Act for the amount taxed. Third, sub-section (2D) stops the interest only FROM THE DATE OF PAYMENT. Interest under sub-section (2) read with Rule 10CB continues to run up to that date, so the interest for the period between the end of the repatriation window and the date the additional tax is paid still has to be computed and offered.
Binding on the department, not on the assessee or the courts. An assessee may rely on a circular that is beneficial to them.
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The four sub-sections read: "(2A) Without prejudice to the provisions of sub-section (2), where the excess money or part thereof has not been repatriated within the prescribed time, the assessee may, at his option, pay additional income-tax at the rate of eighteen per cent on such excess money or part thereof, as the case may be. (2B) The tax on the excess money or part thereof so paid by the assessee under sub-section (2A) shall be treated as the final payment of tax in respect of the excess money or part thereof not repatriated and no further credit therefor shall be claimed by the assessee or by any other person in respect of the amount of tax so paid. (2C) No deduction under any other provision of this Act shall be allowed to the assessee in respect of the amount on which tax has been paid in accordance with the provisions of sub-section (2A). (2D) Where the additional income-tax referred to in sub-section (2A) is paid by the assessee, he shall not be required to make secondary adjustment under sub-section (1) and compute interest under sub-section (2) from the date of payment of such tax." Sub-section (2), read with them, provides that where a primary adjustment increases the total income or reduces the loss, "the excess money or part thereof, as the case may be, which is available with its associated enterprise, if not repatriated to India within the time as may be prescribed, shall be deemed to be an advance made by the assessee to such associated enterprise and the interest on such advance, shall be computed in such manner as may be prescribed", and its Explanation clarifies "that the excess money or part thereof may be repatriated from any of the associated enterprises of the assessee which is not a resident in India".
Not a judgment. The statutory position is that where excess money has not been repatriated within the prescribed time the assessee has an option to pay additional income-tax at eighteen per cent on the unrepatriated excess money; that the payment is final, carries no credit for the assessee or any other person, and supports no deduction under any other provision of the Act; and that on payment the assessee is relieved of the obligation to make the secondary adjustment and to compute interest under sub-section (2) from the date of payment onwards.
Not a judgment; no judicial reasoning is stated for these sub-sections. The Government's Memorandum to the Finance (No. 2) Bill, 2019 explains the option in these words: "the assessee will have the option to pay additional income-tax at the rate of eighteen per cent on such excess money or part thereof in addition to the existing requirement of calculation of interest till the date of payment of this additional tax. The additional tax is proposed to be increased by a surcharge of twelve per cent".
(2D) Where the additional income-tax referred to in sub-section (2A) is paid by the assessee, he shall not be required to make secondary adjustment under sub-section (1) and compute interest under sub-section (2) from the date of payment of such tax.
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Handle my notice → Ask a CA on WhatsAppYes. Section 92CE(2A) gives the assessee an option, "without prejudice to the provisions of sub-section (2)", where the excess money or part of it has not been repatriated within the prescribed time, to "pay additional income-tax at the rate of eighteen per cent on such excess money or part thereof". The price of that option is stated in the next three sub-sections and it is absolute. Sub-section (2B) makes the payment "the final payment of tax in respect of the excess money or part thereof not repatriated" and provides that "no further credit therefor shall be claimed by the assessee or by any other person in respect of the amount of tax so paid". Sub-section (2C) provides that "No deduction under any other provision of this Act shall be allowed to the assessee in respect of the amount on which tax has been paid in accordance with the provisions of sub-section (2A)". Sub-section (2D) then closes the loop in the taxpayer's favour: once the additional income-tax is paid "he shall not be required to make secondary adjustment under sub-section (1) and compute interest under sub-section (2) from the date of payment of such tax". These four sub-sections were inserted by Act No. 23 of 2019 with effect from 1 September 2019. This was decided by the CBDT Circulars & Instructions (Not applicable — statutory text) and bears on section 92CE, section 92CE(2), section 92CE(2A), section 92CE(2B), section 92CE(2C), section 92CE(2D), section Rule 10CB of the Income Tax Act 1961. It is reported as Section 92CE(2A) to (2D) of the Income-tax Act, 1961, inserted by Act No. 23 of 2019 with effect from 1 September 2019. The option is usually the commercially sensible answer where the associated enterprise is a foreign parent that will not repatriate, because the alternative is a deemed advance carrying imputed interest under Rule 10CB for as long as the money stays abroad — indefinitely. But the reader must understand three limits before he takes it. First, the tax is on the EXCESS MONEY itself, not on the interest, and eighteen per cent of the whole unrepatriated amount can dwarf a year or two of imputed interest, so the option is worth taking only when repatriation is genuinely not going to happen. The eighteen per cent in the section is not the whole cost. Section 2(4) of the Finance (No. 2) Act, 2019 increases the tax charged under s.92CE(2A) by a surcharge of twelve per cent, and s.2(12) of that Act adds a four per cent Health and Education Cess on the tax and surcharge together, so the effective rate for that year is 20.9664 per cent. Because the surcharge and cess come from the annual Finance Act and not from s.92CE, the rate has to be taken from the Finance Act in force for the year in which the option is exercised. Second, the finality is complete: it is not an advance payment of anything, no credit can be taken by the assessee or by any other person — which means the associated enterprise cannot claim it either — and no deduction is allowed anywhere else in the Act for the amount taxed. Third, sub-section (2D) stops the interest only FROM THE DATE OF PAYMENT. Interest under sub-section (2) read with Rule 10CB continues to run up to that date, so the interest for the period between the end of the repatriation window and the date the additional tax is paid still has to be computed and offered. If it applies to you, the first step is this: Model both routes before electing: eighteen per cent of the whole unrepatriated excess money now against imputed interest under Rule 10CB compounding for as long as the money stays with the associated enterprise, and take a view on whether repatriation is realistically possible.
The four sub-sections read: "(2A) Without prejudice to the provisions of sub-section (2), where the excess money or part thereof has not been repatriated within the prescribed time, the assessee may, at his option, pay additional income-tax at the rate of eighteen per cent on such excess money or part thereof, as the case may be. (2B) The tax on the excess money or part thereof so paid by the assessee under sub-section (2A) shall be treated as the final payment of tax in respect of the excess money or part thereof not repatriated and no further credit therefor shall be claimed by the assessee or by any other person in respect of the amount of tax so paid. (2C) No deduction under any other provision of this Act shall be allowed to the assessee in respect of the amount on which tax has been paid in accordance with the provisions of sub-section (2A). (2D) Where the additional income-tax referred to in sub-section (2A) is paid by the assessee, he shall not be required to make secondary adjustment under sub-section (1) and compute interest under sub-section (2) from the date of payment of such tax." Sub-section (2), read with them, provides that where a primary adjustment increases the total income or reduces the loss, "the excess money or part thereof, as the case may be, which is available with its associated enterprise, if not repatriated to India within the time as may be prescribed, shall be deemed to be an advance made by the assessee to such associated enterprise and the interest on such advance, shall be computed in such manner as may be prescribed", and its Explanation clarifies "that the excess money or part thereof may be repatriated from any of the associated enterprises of the assessee which is not a resident in India". The matter was decided on 2019-09-01 by the CBDT Circulars & Instructions (Not applicable — statutory text). On those facts the CBDT Circulars & Instructions held as follows. Not a judgment. The statutory position is that where excess money has not been repatriated within the prescribed time the assessee has an option to pay additional income-tax at eighteen per cent on the unrepatriated excess money; that the payment is final, carries no credit for the assessee or any other person, and supports no deduction under any other provision of the Act; and that on payment the assessee is relieved of the obligation to make the secondary adjustment and to compute interest under sub-section (2) from the date of payment onwards.
Not a judgment; no judicial reasoning is stated for these sub-sections. The Government's Memorandum to the Finance (No. 2) Bill, 2019 explains the option in these words: "the assessee will have the option to pay additional income-tax at the rate of eighteen per cent on such excess money or part thereof in addition to the existing requirement of calculation of interest till the date of payment of this additional tax. The additional tax is proposed to be increased by a surcharge of twelve per cent". In the words reproduced by the source cited on this page: "(2D) Where the additional income-tax referred to in sub-section (2A) is paid by the assessee, he shall not be required to make secondary adjustment under sub-section (1) and compute interest under sub-section (2) from the date of payment of such tax."
It was decided by the CBDT Circulars & Instructions on 2019-09-01 and is reported as Section 92CE(2A) to (2D) of the Income-tax Act, 1961, inserted by Act No. 23 of 2019 with effect from 1 September 2019. Binding on the department, not on the assessee or the courts. An assessee may rely on a circular that is beneficial to them. A CBDT circular or instruction binds officers of the department but not the assessee and not the courts. Where a circular helps you, you may hold the department to it. Where it hurts you, it cannot override the Act or a judgment. On section 92CE, section 92CE(2), section 92CE(2A), section 92CE(2B), section 92CE(2C), section 92CE(2D), section Rule 10CB, the practical question is whether the facts of your own notice match the facts of this case closely enough for the same rule to apply.
It cuts both ways and is cited by both sides. Not a judgment. The statutory position is that where excess money has not been repatriated within the prescribed time the assessee has an option to pay additional income-tax at eighteen per cent on the unrepatriated excess money; that the payment is final, carries no credit for the assessee or any other person, and supports no deduction under any other provision of the Act; and that on payment the assessee is relieved of the obligation to make the secondary adjustment and to compute interest under sub-section (2) from the date of payment onwards. It arises in Assessment & Scrutiny and How Tax Law Is Read matters, on section 92CE, section 92CE(2), section 92CE(2A), section 92CE(2B), section 92CE(2C), section 92CE(2D), section Rule 10CB of the Income Tax Act 1961, and was decided by Not applicable — statutory text. Before relying on it, read the source linked on this page and check whether it has since been distinguished, overruled or overtaken by an amendment to the Income Tax Act. In practice the steps that follow from it are these. Compute and offer the interest under s.92CE(2) for the period up to the date you pay the additional tax. Sub-section (2D) relieves you only "from the date of payment of such tax"; it does not wipe out the earlier period. Do not book the eighteen per cent as an advance tax or a prepaid tax in your accounts or your return. Section 92CE(2B) makes it the final payment and bars any further credit, by you or by anyone else. Do not claim the amount taxed as a deduction anywhere — s.92CE(2C) bars a deduction under any other provision of the Act in respect of it. Compute the option at the effective rate, not the headline rate: eighteen per cent under s.92CE(2A), increased by the twelve per cent surcharge in s.2(4) of the Finance (No. 2) Act, 2019 and the four per cent Health and Education Cess in s.2(12) of that Act — 20.9664 per cent for that year — and check the corresponding provision of the Finance Act in force for your own year, since it is the Finance Act and not s.92CE that levies the surcharge and cess.
Still good law. The text is current so far as can be established here: two published editions of different vintage print the four sub-sections identically, and the later of them carries a footnote dating their insertion to Act No. 23 of 2019 with effect from 1 September 2019. The sub- sections were read again on the most recent edition located, as amended up to 2024, and came back in identical words. No decision construing s.92CE(2A) has been found, and no check of judicial treatment of these sub-sections has been made, so nothing here is a survey of the authority. THE RATE IN THE SECTION IS NOT THE COST. Section 92CE(2A) prescribes eighteen per cent and says nothing about surcharge or cess; the surcharge and cess come from the annual Finance Act, and the effective rate must therefore be taken from the Finance Act in force for the year in which the option is exercised. The editor note works out the figure for the year of insertion and explains how. Three questions the sub-sections leave open. What 'the prescribed time' for repatriation is, and how it is computed, is in rule 10CB and is not set out here. Whether the option can be exercised in part — the words are 'on such excess money or part thereof' — appears to allow it, but nothing states how the interest under sub-section (2) is then apportioned. And sub-section (2D) relieves the assessee of the secondary adjustment and of interest only FROM THE DATE OF PAYMENT, so the interest for the period between the end of the repatriation window and that date still has to be computed and offered; that is the point most often missed when the option is taken late. No source could be cited for that finding. Checking whether an authority still stands matters as much as knowing what it held: a decision may be overruled on one point and survive on another, or the provision it interprets may have been amended since. Read the source and the editor's note on this page before relying on it in a reply to an Assessing Officer or in an appeal.
Sub-sections (2A) to (2D) were transcribed from the edition as amended up to 2021, which prints the Income-tax Act, 1961 and the heading 'Secondary adjustment in certain cases', and were transcribed again in identical words from the edition as amended up to 2019. The footnote dating them was transcribed verbatim and reads 'Ins. by the Act. No. 23 of 2019, w.e.f. 1-9-2019.'; Act No. 23 of 2019 is the Finance (No. 2) Act, 2019, and 1 September 2019 is the 'decided_on' value. THE SURCHARGE IS NOT IN THE SECTION, and this is the single most important thing to carry away from the entry. The section prescribes eighteen per cent and says nothing about surcharge or cess. The figure of twelve per cent comes from the Memorandum accompanying the Finance (No. 2) Bill, 2019, which states in terms that 'The additional tax is proposed to be increased by a surcharge of twelve per cent'. THE ENACTING PROVISION. Section 2(4) of the Finance (No. 2) Act, 2019 (Act No. 23 of 2019) provides: 'In cases in which tax has to be charged and paid under sub- section (2A) of section 92CE or section 115-O or section 115QA or sub-section (2) of section 115R or section 115TA or section 115TD of the Income-tax Act, the tax shall be charged and paid at the rates as specified in those sections and shall be increased by a surcharge, for the purposes of the Union, calculated at the rate of twelve per cent. of such tax.' Section 2(12) of the same Act then provides that the income-tax specified in sub-sections (4) to (10), as increased by the applicable surcharge, 'shall be further increased by an additional surcharge ... to be called the "Health and Education Cess on income-tax", calculated at the rate of four per cent. of such income-tax and surcharge'. Eighteen per cent increased by a twelve per cent surcharge and a four per cent cess is 20.9664 per cent, which is where the commonly quoted effective rate comes from. That text of section 2(4) was read on two independent sources and came back identical, which is why it is used; neither is a Government of India source, so the citation is given by Act, section and sub-section, and the reader should confirm it against the Finance Act in force for his own year, because the surcharge and cess are levied by the annual Finance Act and not by s.92CE itself. This library shows the verification state of every entry openly. This entry has not yet been read in full by a chartered accountant. The summary reflects the sources listed on this page. Read the source before you rely on it in a reply to an Assessing Officer or in an appeal before the Commissioner (Appeals) or the Income Tax Appellate Tribunal.
Not a judgment. The statutory position is that where excess money has not been repatriated within the prescribed time the assessee has an option to pay additional income-tax at eighteen per cent on the unrepatriated excess money; that the payment is final, carries no credit for the assessee or any other person, and supports no deduction under any other provision of the Act; and that on payment the assessee is relieved of the obligation to make the secondary adjustment and to compute interest under sub-section (2) from the date of payment onwards.
TaxSphere, “Statutory position — s.92CE(2A) to (2D): the one-time option to pay eighteen per cent additional income-tax instead of repatriating, and the three doors it closes — no deduction, no credit, no refund”, https://taxnotice.vittsphere.com/caselaw/case/statutory-position-92ce-2a-to-2d-the-eighteen-per-cent-one-time-tax-instead-of-repatriating-and-the-finality-it-carries/ (validity last checked 2026-09-09)
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My primary adjustment stands and the money is still with my overseas associated enterprise. When exactly do my ninety days start, and at what rate is the deemed advance to be charged interest?
The TPO's order says I must now make a secondary adjustment. Which primary adjustments actually trigger s.92CE, and is there any threshold or year below which the section simply does not apply to me?
The TPO has fixed a guarantee commission rate I dispute AND imputed interest on the delay as a secondary adjustment. Can the secondary adjustment stand while the underlying rate is still being fought over?
The TPO is charging notional interest on my overdue receivables from my associated enterprise. Can I argue for a 90-day credit period by analogy to the secondary adjustment repatriation window in s.92CE and Rule 10CB?
