🏛️ Finance Bill 2026 — Chapter III (A)

Direct Tax Amendments 2026 (IT Act 1961)

Key amendments to the Income-tax Act, 1961 — covering transfer pricing, return filing, reassessment, a new interest section, and dispute resolution. Here’s what changed and what it means for you.

🔁 Transfer Pricing — Section 92CA

Section 92CA governs reference to the Transfer Pricing Officer (TPO). The 2026 amendment streamlines TPO timelines, strengthens documentation requirements for multinationals, and aligns TPO orders with revised assessment time limits under Section 153. Companies with cross-border related-party transactions must ensure robust TP documentation.

📄 Updated Return Filing — Section 139

The Updated Return window (ITR-U under Section 139(8A)) is extended from 2 years to 4 years from end of the assessment year. Higher additional tax (25%) applies for filings in years 3–4. Updated returns cannot be filed if a search, survey or reassessment has been initiated.

🔍 New Section 147A — Reassessment

A new Section 147A creates a separate reassessment track using AI-driven risk profiling and data from foreign jurisdictions, SFT, and AIS. Show cause notice must be issued before reopening. Cases involving income above ₹50 lakhs can be reopened up to 10 years. Faceless reassessment principles continue to apply.

💸 New Section 234-I — Interest on Tax Arrears

A new Section 234-I levies 1% per month simple interest on tax arrears from the date of demand to the date of payment. Applicable across all assessment types. Waiver requires prior approval and proof that delay was beyond taxpayer’s control.

🤝 Dispute Resolution Panel — Section 245MA

The DRP direction timeline is reduced from 9 months to 6 months. DRP directions are now binding on the Assessing Officer with no discretion. More taxpayer categories are eligible to approach the DRP. The DRP can now enhance or reduce draft orders.