Sections 171-173 explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
Sections 171, 172 and 173 are the paperwork and vocabulary of transfer pricing. Section 171 requires persons with an international transaction, a specified domestic transaction or a role as a constituent entity of an international group to keep and furnish information and documents. Section 172 requires an accountant's report from persons who enter into such transactions. Section 173 defines arm's length price, enterprise, permanent establishment, specified date and transaction. This article reads them as per the Income-tax Act, 2025 (30 of 2025) as amended by the Finance Act, 2026.
Every person with an international transaction or specified domestic transaction, and every constituent entity of an international group, must keep and maintain the prescribed information and documents. On a notice, a transaction-holder must furnish them within ten days, extendable by up to thirty days on application. A report from an accountant must be furnished on or before the specified date, which is one month before the due date for the return under section 263(1).
Scope
These sections are in Chapter X. The Act came into force on the 1st April, 2026 (section 1(3)), save as otherwise provided. What must be kept, for how long, in what manner and in what form is left to the Income-tax Rules, 2026; see our rule-wise guides. The fee for not furnishing the report under section 172 sits in the late-filing fee section; see our post on section 428 (fee). Later amendments, rules and notifications should be checked.
The transactions are defined in sections 163 and 164, and the price in section 165. For the Chapter overview, read Chapter X of the Income-tax Act, 2025. If you need the documentation set up, our books of accounts compliance team can help.
Section 171: maintenance, keeping and furnishing of information and documents
Section 171(1): who must keep records
Every person who (a) has entered into an international transaction or specified domestic transaction, or (b) is a constituent entity of an international group, shall keep and maintain such information and documents in respect thereof, for such period and in such manner, as may be prescribed.
Section 171(2) and (3): furnishing on notice
The Assessing Officer or the Commissioner (Appeals) may, during any proceeding under the Act, require any person referred to in sub-section (1)(a) to furnish any information or document referred to there within ten days from the date of receipt of a notice issued in this regard. On an application made by such person, he may extend the period of ten days by a further period not exceeding thirty days.
| Step | Period |
|---|---|
| Notice received | Day zero |
| Information or document to be furnished | within ten days from receipt of the notice |
| Extension on application | by a further period not exceeding thirty days |
| Maximum, counting both | forty days |
Section 171(4) and (5): constituent entities of an international group
Every person referred to in sub-section (1)(b) shall furnish the information and documents to the authority prescribed under section 511(1), in such manner and on or before such date as may be prescribed. For this section, "constituent entity" has the meaning assigned in section 511(10)(d), and "international group" the meaning assigned in section 511(10)(g). Those definitions are in section 511 and are not set out in this article.
Section 172: report from an accountant
Every person who has entered into an international transaction or specified domestic transaction during a tax year shall obtain a report from an accountant and furnish it:
- on or before the specified date;
- in the prescribed form;
- duly signed and verified in the manner prescribed by that accountant; and
- setting forth such particulars as may be prescribed.
"Specified date" is defined in section 173(d). A printing slip: the section's first word is printed as "E very" with a space in the copy consulted; read it as "Every".
The section applies to a person who has entered into the transaction "during a tax year", and it does not depend on the size of the transaction: the twenty crore rupee aggregate in section 164 is part of the meaning of a specified domestic transaction, so a transaction that is not a specified domestic transaction does not trigger the report. That is how the two sections fit together.
Section 173: definitions
For the purposes of section 173 and sections 161, 162, 163, 165, 171 and 172, unless the context otherwise requires:
| Clause | Term | Meaning |
|---|---|---|
| (a) | "arm's length price" | a price which is applied or proposed to be applied in a transaction between persons other than associated enterprises, in uncontrolled conditions |
| (b) | "enterprise" | a person (including a permanent establishment of such person) who is, or has been, or is proposed to be, engaged in any activity relating to (i) the production, storage, supply, distribution, acquisition or control of articles or goods; (ii) know-how, patents, copyrights, trade-marks, licences, franchises or other similar business or commercial rights; (iii) any data, documentation, drawing or specification relating to any patent, invention, model, design, secret formula or process of which the other enterprise is the owner or has exclusive rights; (iv) provision of services of any kind; (v) carrying out any work in pursuance of a contract; (vi) investment or providing loan; or (vii) business of acquiring, holding, underwriting or dealing with shares, debentures or other securities of any other body corporate, whether carried on directly or through one or more of its units, divisions or subsidiaries, and whether or not at the same place |
| (c) | "permanent establishment" | referred to in clause (b), includes a fixed place of business through which the business of the enterprise is wholly or partly carried on |
| (d) | "specified date" | the date one month before the due date for furnishing the return of income under section 263(1) for the relevant tax year |
| (e) | "transaction" | includes an arrangement, understanding or action in concert, (i) whether or not formal or in writing, or (ii) whether or not intended to be enforceable by legal proceeding |
The definition of "arm's length price" in clause (a) is the one used in section 170(9)(a); see our article on section 170. Section 173 does not extend to section 164 or 166, which carry their own wording, though section 176 applies sections 171 to 173 to transactions with persons in a notified jurisdictional area.
A worked example
Names and dates are invented; the periods and the specified date rule are as printed.
Tulsi Chemicals Private Limited has an international transaction with its parent abroad. The due date for its return under section 263(1) for the tax year is, say, the 31st October (assumed for the example). The specified date is then one month before: the 30th September.
- The accountant's report under section 172 must be obtained and furnished on or before the 30th September, in the prescribed form.
- The Assessing Officer issues a notice during assessment requiring Tulsi to furnish the documents it is required to keep under section 171(1). Tulsi has ten days from receipt. If it applies in time, the Assessing Officer may extend the period by up to thirty further days.
- If the documents are not kept and maintained as per section 171(1), or are not furnished within the specified time on a notice under section 171(2) and (3), those are two of the four situations in which the Assessing Officer may determine the arm's length price under section 165(4)(b) and (d).
Need help with transfer pricing documentation?
The documents under section 171 and the report under section 172 are tied to dates, and a default feeds directly into section 165. Our books of accounts compliance service can help you keep the records and meet the specified date.
Key takeaways
- A person with an international transaction or specified domestic transaction, and a constituent entity of an international group, must keep the prescribed information and documents.
- Documents are due within ten days of a notice, extendable by up to thirty days on application.
- The accountant's report under section 172 is due on or before the specified date, one month before the return due date under section 263(1).
- Section 173 defines arm's length price, enterprise, permanent establishment, specified date and transaction for these sections.
- Failure to keep or furnish documents is a ground on which the price can be determined under section 165(4).
Read next
- Section 170: secondary adjustment in transfer pricing
- Section 174: transfer of income to non-residents through transfer of assets
- Section 165: determination of arm's length price
- Section 428: late-filing fee
Disclaimer: Based on the Income-tax Act, 2025 (30 of 2025) as amended by the Finance Act, 2026, as consulted on 2 October 2026. It explains the words of the Act only; the Income-tax Rules, 2026, notifications, circulars, later amendments and the way the tax authorities and courts apply these provisions should be checked. This article is general information, not legal advice; check the official text before acting.