Rule 85 — Report from an accountant to be furnished under section 172. Made under s.172, s.263, s.515 of the Income-tax Act, 2025.
Rule 85 gives effect to Section 172, Section 263 and Section 515 of the Income-tax Act, 2025. A rule cannot go beyond the section it serves: where the two seem to differ, the section governs.
Sub-rule (1) requires the report from an accountant, as defined in section 515(3)(b), that section 172 requires of every person who has entered into an international transaction or a specified domestic transaction during a tax year, to be in Form No. 48 and to be verified in the manner indicated in that form.
Sub-rule (2) fixes the time: the report shall be furnished at least one month prior to the due date of furnishing the return of income as per section 263(1)(c).
Section 172 requires an accountant's report on international and specified domestic transactions but does not prescribe the form or the date. This rule supplies both, and puts the report a month ahead of the return so that the transfer pricing position is settled and certified before the return that carries it is filed.
| What | Figure | The condition on it | Where |
|---|---|---|---|
| Time for furnishing the accountant's report | At least one month prior to the due date of furnishing return of income as per section 263(1)(c) | Applies to the report under section 172 in Form No. 48 | Rule 85(2) |
The date is not the return date. Sub-rule (2) sets the report at least one month before the section 263(1)(c) due date, so a person who prepares the report alongside the return is already late. The obligation follows the transaction, not the tax outcome — entering into an international transaction or a specified domestic transaction during the tax year is what attracts section 172, whether or not any adjustment results. The accountant is the one defined in section 515(3)(b), and the report has to be verified in the manner Form No. 48 itself indicates.
A company enters into a single international transaction with its overseas parent during the tax year. Its return is due under section 263(1)(c) on 30 November. The Form No. 48 report from the accountant must be furnished at least one month earlier, by 31 October, even though the transaction is small and the company expects no adjustment.
You meet it as the Form No. 48 report filed ahead of the return, and again in any transfer pricing proceeding, where the report and the return are read together.
The report referred to in sub-rule (1) shall be furnished at least one month prior to the due date of furnishing return of income as per section 263(1)(c).