International Tax Disputes and How They Are Resolved
Transfer pricing and permanent establishment are the two largest sources of long running tax litigation in India. This guide sets out how a cross border dispute is built, the one window that cannot be recovered if it is missed, the routes out, and the two mechanisms that keep you out of the argument entirely if they are started early enough.
- Thirty days to object to the Dispute Resolution Panel, from the draft assessment order
- The Vivad se Vishwas scheme closed on 30 April 2025
- Mutual agreement procedure can run in parallel with a domestic appeal, until the Tribunal decides
- India has not enacted the global minimum tax, which does not make an Indian group safe from it
Four numbers that govern the timetable
Four steps, and the one where the clock starts
Two Acts are live at once. The Income-tax Act 1961 governs FY 2025-26, the year being filed now. The Income-tax Act 2025 governs tax year 2026-27 onward. Section, rule and form numbers differ between them, so every citation below names the year and the Act. The architecture of appellate remedies is unchanged between the two Acts. The section numbers are not.
1. Reference to the Transfer Pricing Officer
The Assessing Officer, with the prior approval of the Principal Commissioner or Commissioner, refers the determination of the arm's length price. Where a reference is made, the assessment limitation is extended by twelve months, which is why transfer pricing years stay open longer than ordinary years.
2. The officer's order
The Transfer Pricing Officer determines the arm's length price by an order that has to be passed a set period before the assessment limitation expires. Under the 1961 Act the period is at least sixty days; the Finance Act 2026 restated the formulation for the 2025 Act as one month prior to the month in which limitation expires, with specific treatment for 31 March and 31 December dates.
3. The draft assessment order
Where the proposed variation is prejudicial to an eligible assessee, the Assessing Officer must forward a draft order rather than a final one. This is the moment the thirty day clock starts, and it is the moment most commonly mishandled, because a draft order does not look like the crisis it is.
4. Either the Panel or the ordinary route
Within thirty days the eligible assessee either accepts the variations or files objections with both the Dispute Resolution Panel and the Assessing Officer. What happens if it does neither is the subject of the next section.
An eligible assessee is any person in whose case the variation arises as a consequence of an order of the Transfer Pricing Officer, and any non resident not being a company or any foreign company. Persons assessed under the block assessment provisions were carved out in 2024. So the draft order route covers both of the disputes this guide is about: transfer pricing, and anything affecting a foreign company including permanent establishment.
The subsection level timelines under the Income-tax Act 2025 are given here from the Act's structure rather than quoted from the official consolidated text.
A faster route, with a hard door
What it is
A collegium that reviews the proposed variation before it becomes a final assessment. It can confirm, reduce or enhance the variations. It has no power to set aside the proposal or remit it for fresh assessment, so it either decides the point or leaves it standing. Section 144C under the 1961 Act, section 275 under the 2025 Act.
The timetable
Objections within thirty days of receiving the draft order, filed with the Panel and the Assessing Officer. The Panel's directions cannot issue after nine months from the end of the month in which the draft order was forwarded. The Assessing Officer must then complete the assessment within one month from the end of the month in which the directions are received.
Why it can enhance
The power to enhance is real and is the reason the choice is a choice. A taxpayer with a weak point and a strong one may prefer not to put both in front of a body that can increase the variation. That calculation has to be made inside thirty days.
What follows
An order passed to give effect to the Panel's directions is appealable directly to the Tribunal, skipping the first appellate authority. For a large cross border adjustment that is usually the attraction: one tier fewer, and a specialist bench.
The thirty days is the point of this page
It runs from receipt of the draft assessment order. It is not extendable in the way an appeal delay can be condoned, and a draft order arriving in an inbox during a busy month is easy to treat as correspondence. If you take one thing from this guide, make it a rule that any order describing itself as a draft is escalated on the day it arrives.
The Panel is optional. An eligible assessee can simply not object. When the thirty days pass with no objection, the Assessing Officer completes the assessment on the basis of the draft, and that final order can be appealed to the Commissioner (Appeals) in the ordinary way. Section 144C(3)(b) of the 1961 Act provides for the assessment, and the appeal provision shuts out only an order passed on the Panel's directions. The Board said in terms, in paragraph 45.4 of Circular 5/2010, that the choice between the Panel and the ordinary appeal is the assessee's. The High Court recognised it in Rain Cements in 2016, and the Tribunal applied it directly in Samsung Heavy Industries in 2017 and Mann and Hummel in 2020. The 2025 Act keeps the same structure: section 275(3) requires the assessment to be completed where no objection is filed, and section 357 excludes from the first appeal only an order made on the Panel's directions.
One point of wording matters. Letting the window pass is not the same as accepting the variations, which the section treats as a separate, positive response. If you intend to appeal, do not write to accept; simply do not object, and appeal the final order.
Same architecture, different numbers
| Tier | 1961 Act | 2025 Act | Time limit | Form and fee |
|---|---|---|---|---|
| Joint Commissioner (Appeals) | Section 246 | Section 356 | 30 days | For orders of officers below Joint Commissioner rank, with exceptions |
| Commissioner (Appeals) | Section 246A | Section 357 | 30 days from service of the notice of demand or the order, condonable on sufficient cause | Form 35. Rs 250, Rs 500 or Rs 1,000 by assessed income band. Tax on returned income must be paid before admission unless excused |
| Appellate Tribunal | Section 253 | Section 362 | Two months from the end of the month in which the order is communicated, since 1 October 2024. Cross objections within 30 days | Form 36, and Form 36A for cross objections. Rs 500, Rs 1,500, or one per cent of assessed income capped at Rs 10,000 |
| High Court | Section 260A | Section 365 | 120 days | Only on a substantial question of law, which the Court must formulate in writing |
| Supreme Court | Section 261 | Section 367 | On appeal from the High Court | Where the High Court certifies the case fit |
Section 253 of the Income-tax Act 2025 is survey, not Tribunal appeals. Anyone carrying the old number forward into the new Act is citing the survey power. Note also that the Tribunal limitation has not been sixty days since 1 October 2024, which a great deal of published content still says.
When the department will not appeal
The Board's circular of 17 September 2024 raised the tax effect thresholds below which the department shall not file an appeal: Rs 60 lakh for the Tribunal, Rs 2 crore for a High Court and Rs 5 crore for the Supreme Court. It applies to pending appeals, which were to be withdrawn, and the listed exceptions continue to be pursued on merits regardless of amount. Content written before September 2024 quotes Rs 50 lakh, Rs 1 crore and Rs 2 crore. We found no later circular revising these figures.
The Dispute Resolution Committee for small taxpayers sits outside all of this. Its thresholds, a variation not exceeding Rs 10 lakh and returned income not exceeding Rs 50 lakh, put it out of reach of every dispute this guide is about. It is mentioned for completeness and because it is frequently described as an international tax remedy, which it is not.
Mutual agreement procedure
Where India taxes something the other country has already taxed, the treaty provides a route for the two competent authorities to resolve it between themselves rather than leaving the taxpayer doubly taxed. This is the only mechanism that can actually remove double taxation. A domestic appeal can only change the Indian side.
| Aspect | Position as at 19 September 2026 |
|---|---|
| Governing guidance | The Board's guidance of 10 June 2022, which updated and superseded the guidance of 7 August 2020. Most published Indian material still cites the 2020 version |
| Rule and form | Rule 44G and Form 34F under the 1962 Rules. Rule 121 and Form 55 under the Income-tax Rules 2026, with the treaty provisions now in section 159. Form 55 is the resident taxpayer's application to the Indian competent authority. Where the case starts with the other country's competent authority, Rule 121(2) governs how India handles the reference and no Form 55 is filed in India |
| Time to apply | Generally three years from the first notification of the action giving rise to taxation not in accordance with the treaty, though a small number of India's treaties differ |
| Target | India endeavours to resolve cases within an average of 24 months from the agreed start date. This is a standard commitment, not a statutory guarantee |
| Running alongside an appeal | Permitted. India allows mutual agreement procedure to run in parallel with domestic remedies. But once the Tribunal decides the issue on merits, the Indian competent authority will not deviate from that order, the procedure closes, and the Indian side instead seeks correlative relief from the treaty partner |
| Transfer pricing | India grants access for transfer pricing adjustments |
There is no arbitration backstop
India did not opt into Part VI of the Multilateral Instrument, which provides mandatory binding arbitration, and India's own dispute resolution profile says arbitration is not available under any of its treaties. The competent authorities have to try to agree; they do not have to succeed. If they cannot, the case is closed as unresolved and the taxpayer is told so. Nothing escalates it further. That makes the parallel domestic appeal a real hedge rather than a duplication, and it makes the timing of a Tribunal hearing a strategic question rather than a procedural one. The hedge only works if it is kept alive: an appeal deadline missed while waiting on the competent authorities is not revived when they fail to agree.
Advance pricing agreements
An advance pricing agreement fixes the arm's length price, or the method for arriving at it, in advance and in writing with the department. Unilateral agreements bind India. Bilateral and multilateral agreements bind India and the treaty partner, which is what actually removes double taxation risk rather than merely Indian risk.
The term is up to five tax years forward, with rollback available for up to four preceding years, so a single instrument can settle nine years. For a recurring related party transaction that has been argued about before, that is often the cheapest certainty available.
| FY 2025-26, Income-tax Act 1961 | Tax year 2026-27 onward, Income-tax Act 2025 | |
|---|---|---|
| Provisions | Sections 92CC and 92CD | Sections 168 and 169, with Rule 106 for the application and Rule 111 for rollback |
| Pre-filing consultation | Form 3CEC | Form 50 |
| Application, including rollback | Form 3CED and Form 3CEDA separately | Form 51, a single consolidated application |
| Annual compliance report | Form 3CEF | Form 52 |
| Renewal | No separate route | Form 54, a new renewal application with lighter documentation focused on deviations from the prior filing |
The renewal route is new and almost absent from published commentary. For a group that has been through the process once, it is the difference between repeating the exercise and updating it.
Where the programme stands
219 agreements were signed in the year to 31 March 2026, a record, of which 84 were bilateral against a previous best of 65. Cumulative signings crossed one thousand and stand at 1,034: 750 unilateral and 284 bilateral. Bilateral agreements now span thirteen treaty partners, with first ever agreements concluded with France, Ireland, Indonesia and Sweden. The figures are from the Board's release of 31 March 2026.
How long it takes
Historically a long time. In the year to 31 March 2026 unilateral agreements took about 41 months on average and 36 at the median, though the most common band had shortened to 13 to 24 months. Information technology services now have a faster track with a rule behind it. Under Rule 109(13) of the Income-tax Rules 2026, a unilateral application whose main transaction is information technology services is closed if no agreement is signed within two years from the end of the quarter in which it was made, and Rule 109(14) lets the applicant ask for six months more. So plan on up to two years, with a contingency to thirty months. That is a deadline for concluding or closing the case, not a promise of an agreement: the consequence of missing it is that the application ends.
Two things to establish before applying
First, rollback. Under Rule 111 of the Income-tax Rules 2026 a year can be rolled back only if the return for that year, and the transfer pricing report for it, were filed within the due date under section 263(1)(c), meaning the date as lawfully extended for that year if it was. A belated return does not qualify, so a client with a history of late filing loses those years from the most valuable part of the instrument. Rollback also has to cover every year in which the transaction took place, is asked for in the Form 51 application with an additional fee of Rs 5 lakh, and is not available for a year where the Tribunal has already decided the issue or where it would reduce the income originally returned. Second, the fee. The application fee under Rule 106 is a flat Rs 20 lakh, whatever the value of the transactions and whether the agreement is unilateral, bilateral or multilateral. It replaced the old bands of Rs 10, 15 and 20 lakh. It is not refunded if you withdraw, though it is if the application is rejected at the first stage for a defect you were given the chance to cure and did not.
The other route to certainty, a safe harbour election, is cheaper and blunter: a prescribed margin accepted without examination, elected in advance. It is covered on the transfer pricing compliance guide, and the ceiling for information technology services moved from Rs 300 crore to Rs 2,000 crore for tax year 2026-27, which brings it within reach of businesses that were previously far outside it.
The one people still ask about is closed
Vivad se Vishwas 2024 closed on 30 April 2025
The Direct Tax Vivad se Vishwas Scheme 2024 opened on 1 October 2024 for appeals pending as at 22 July 2024, with a lower settlement rate for declarations filed by 31 December 2024, later extended to 31 January 2025. The Board notified 30 April 2025 as the last date on which any declaration could be filed. No declaration can be filed today. Declarations filed on or before that date continue to be processed. The substance is not in doubt; we have not read the closing notification itself.
This is the most common live error in Indian advisory content. A large amount of material that looks current still describes the scheme as open, or quotes the December and January dates as the deadline without saying the scheme has since closed entirely. There is no successor scheme that we could find.
The faceless schemes survived the change of Act. Section 536(2)(u) of the 2025 Act continues any scheme made under the 1961 Act to remove face to face interface, so the Faceless Appeal Scheme 2021, the e-Dispute Resolution Scheme 2022 and the e-Appeals Scheme 2023 remain in force without being notified again, and the Board's transition guidance says so. Each has its own scope, eligibility and exclusions, though, and some international tax matters fall outside the ordinary faceless allocation, so do not assume a cross border dispute will be heard the way a domestic one is. For tax years that began before 1 April 2026, the 1961 Act and its procedure continue to govern the proceeding.
India has not enacted it, and that is not the end of the question
As at 19 September 2026, India has not enacted the global minimum tax rules. There is no Indian income inclusion rule, no undertaxed profits rule and no Indian qualified domestic minimum top up tax. India remains a member of the international framework that designed the rules, and has not implemented them.
A great deal of Indian commentary, some of it from firms that should know better, was written in anticipation of legislation and reads as though India has legislated or is about to. Forward dated compliance calendars for an Indian top up tax are circulating. Any statement that India has a top up tax is wrong today.
Not implementing is not the same as not being exposed
An Indian headed group above the revenue threshold is exposed through other countries' rules. Foreign subsidiaries in jurisdictions with a domestic top up tax will pay it locally. Intermediate parents in jurisdictions with an income inclusion rule may collect top up tax on low taxed entities in the group, and in some cases that includes Indian entities, because India's concessional corporate rates and its special economic zone and financial centre benefits can pull an Indian effective rate under the minimum. Because India imposes no domestic obligation, there is nothing in the Indian compliance calendar to prompt any of this.
1. Establish whether you are in scope
Consolidated group revenue at or above the threshold in two of the four preceding years. This is a group level test on consolidated accounts, not an Indian test.
2. Run the transitional safe harbour tests
Jurisdiction by jurisdiction, off country by country reporting data you already produce. Many jurisdictions fall out at this stage, and knowing which is most of the work saved.
3. Identify which group jurisdictions have implemented
A domestic top up tax or an income inclusion rule, and what each one's registration and filing deadlines are. These are foreign obligations with foreign penalties.
4. Decide who files the information return and where
India provides no domestic filing obligation to anchor it, so this has to be answered from outside the Indian group structure.
5. Model the Indian effective rate on the international basis
It is not the Indian book rate and it is not the statutory rate. Concessional regimes are exactly what pull it down.
Questions clients ask once a notice has arrived
We have received a draft assessment order. What is the first thing to do?
Diary the thirty day date the same day, and work backwards from it. Objections go to both the Dispute Resolution Panel and the Assessing Officer. The decision about whether to use the Panel at all has to be made inside that window, and the Panel can increase the variation as well as reduce it, so it is a real decision rather than a formality.
Should we go to the Panel or to the ordinary appeal route?
It turns on the strength of the points, the appetite for the enhancement risk and the timetable. An order giving effect to the Panel's directions is appealable directly to the Tribunal, which removes a tier. The ordinary route is open too: if you do not object, the final order goes to the Commissioner (Appeals), as the Board confirmed in Circular 5/2010. What you should not do is write to accept the variations and then appeal them.
Can we run a mutual agreement procedure and an appeal at the same time?
Yes, and often you should, because the procedure is the only route that can remove double taxation rather than just the Indian half of it. The point to manage is the Tribunal: once it decides the issue on merits, the Indian competent authority will not depart from that order and the procedure closes.
Is an advance pricing agreement worth it?
For a recurring transaction that has been adjusted before, usually yes, because nine years of certainty in one instrument is hard to buy any other way. For a one off or a volatile transaction, usually not. The two things we check first are whether the returns for the rollback years were filed on time, because a belated return loses that year, and whether a flat Rs 20 lakh fee is proportionate to the transaction.
Can we still use Vivad se Vishwas to settle an old dispute?
No. The scheme closed on 30 April 2025 and no declaration can be filed. If you have read otherwise, the source is out of date, and a good deal of material that looks current still says it is open.
Do we need to do anything about the global minimum tax?
If your group is above the revenue threshold, yes, even though India has not enacted it. The obligations sit in other countries and there is nothing in the Indian calendar to remind you of them. The first step is the scope test and the transitional safe harbour run, both of which use data you already produce.
Where to go next
Where this connects
Most of these disputes start with a documentation or benchmarking weakness, covered on transfer pricing compliance, or with a presence argument, covered on permanent establishment. Domestic assessments and appeals generally sit under Direct Taxation, and goods and services tax notices and proceedings are a separate track entirely, on GST audits, notices and proceedings.
Where to go next
International Taxation
Back to the main page: what we do, how an engagement runs, and how to reach us.
Transfer Pricing Compliance and Documentation
What you have to file and keep when you deal with a related party abroad: the accountant's report that has no threshold at all, the Local File, the Master File that catches far more Indian subsidiaries than people expect, country by country reporting, and the safe harbour that was rewritten this year.
Withholding Tax on Cross Border Payments and Treaty Relief
The payer's problem: deciding whether a payment abroad is chargeable to Indian tax at all, at what rate, what the treaty does to that rate, and what paperwork has to exist before the money leaves. Form 10F, Form 15CA and Form 15CB have all been renumbered.
Permanent Establishment and Taxable Presence in India
When a foreign enterprise becomes taxable in India without ever setting up a company: business connection, significant economic presence, the three kinds of permanent establishment, what the Multilateral Instrument did to your treaty, and how much profit India can attribute once a presence is found.
Cross Border Structuring, Repatriation and Foreign Tax Credit
The outbound side: putting money into a foreign subsidiary under the 2022 overseas investment rules, claiming credit for tax paid abroad, getting profit back to India or out to a foreign parent, and the three rules that constrain how you structure it.
Send an enquiry
If a notice or a draft order has arrived, tell us the date on it and what it proposes. The first thing we will do is work out which clock is running.
Position as at 19 September 2026. Reviewed every six months.
This page is general information, not professional advice. Cross-border tax in India is in the middle of the largest transition it has had in sixty years. The Income-tax Act 2025 replaced the Income-tax Act 1961 on 1 April 2026 and renumbered every section; the Income-tax Rules 2026 replaced the 1962 Rules on the same day and renumbered every rule and every form. The 1961 Act still governs the return being filed for FY 2025-26. That means almost every figure and citation has two correct answers depending on the year you are asking about, and a great deal of published material, including material updated this year, gives only one of them. Take professional advice before acting on anything on this page. We are happy to be that adviser, but we do not act on a web page, ours or anyone else's, without one.