The Last Form 3CEB: Closing FY 2025-26 Under the 1961 Act While Building Year One Under the Income-tax Act, 2025

A deadline days away, and a statute change behind it

Most Indian groups with cross-border related-party dealings are in the same position this week. The final Form 3CEB under the Income-tax Act, 1961 is due on Saturday, 31 October 2026. The statute that created it was repealed on 1 April 2026, and the first Form 48 is already being built, one transaction at a time, under the new Act.

The temptation is to treat these as two separate jobs. That is a mistake, because a tax officer, a foreign parent and a treaty partner will eventually read both years together.

The last Form 3CEB is not an ending. It is the baseline your first Form 48 will be compared against.

What is confirmed, and what is not

The CBDT's own transition FAQs confirm the basic split. The 1961 Act stands repealed from 1 April 2026. Income earned in FY 2025-26 stays under the 1961 Act and is assessed in AY 2026-27. Tax year 2026-27 is the first year under the Income-tax Act, 2025.

For FY 2025-26, the CBDT FAQs state that the audit report in transfer pricing cases is due on 31 October 2026, where the return is due on 30 November 2026.

The extension that did not apply

On 28 September 2026, CBDT Circular No. 07/2026 moved the general tax audit report to 21 October and the related return to 21 November 2026. Adviser commentary consistently reports that section 92E cases were left out, so Form 3CEB remains 31 October and the return 30 November. I relied on the press release and that commentary, not on a full reading of the circular.

The two regimes side by side

On those terms the report for tax year 2026-27 would fall due on 31 October 2027, with the return on 30 November 2027. The CBDT FAQ table for section 263(1)(c) was marked as proposed under Finance Bill 2026, so confirm the enacted wording.

One more point matters for audits. Under section 536, proceedings and penalties for years beginning before 1 April 2026 continue under the 1961 Act. FY 2025-26 will keep running under the old vocabulary for years, while FY 2026-27 runs under the new one.

A renumbered statute, an unchanged international standard

The arm's length principle comes from Article 9 of the OECD Model Tax Convention and the OECD Transfer Pricing Guidelines. Neither has changed because India recodified its law. Section 161 of the 2025 Act restates the rule that income from an international transaction is computed having regard to the arm's length price. India's three-tier documentation of master file, local study and accountant's report also follows the OECD's BEPS Action 13 model.

Where India differs from its peers

India asks a chartered accountant to certify the report. The UK is moving to a taxpayer-prepared International Controlled Transactions Schedule for accounting periods beginning on or after 1 January 2027, and the UAE takes a transfer pricing disclosure form filed with the corporate tax return. India's model puts an independent professional between the taxpayer and the officer, which raises the cost of a careless year.

Treaty and dispute layers

A transfer pricing adjustment in India may lead a foreign group to seek relief under the Mutual Agreement Procedure of the relevant treaty. In my reading, MAP and appeals for FY 2025-26 sit with the 1961 Act, and the first Form 48 year sits with the new Act. Confirm how any existing Advance Pricing Agreement carries across, because I did not find a clear statement on that.

Practitioner judgement

Advisers report that Form 48 asks for more granular disclosures than Form 3CEB. The draft form I saw asks whether documents under section 171 were kept and maintained, which is a documentation question as much as a pricing one. My view is that Indian audits will increasingly start with the year-one record, not the year-one conclusion. Advisers also differ on whether the restated definition in section 163 widens the categories of international transaction, so compare the text line by line instead of assuming continuity.

Two situations that straddle 1 April 2026

Both examples are illustrative and use rounded numbers.

A Pune captive of a UK group

The Indian centre provides software support to its UK parent on a cost plus basis. The year-end true-up for FY 2025-26 is calculated in April 2026 and invoiced in May. The invoice date falls after the new Act began, but the service belongs to FY 2025-26.

That adjustment must be reflected in the FY 2025-26 reporting under the 1961 Act, and the contract for April 2026 onwards starts a new reporting year under the 2025 Act. A single customer therefore appears in two reports with two sets of section references. If the true-up sits only in the new year's ledger, the margin in the final Form 3CEB will not match what the group actually earned.

An Indian manufacturer with a UAE trading subsidiary

For FY 2025-26, the manufacturer sells to the UAE entity at cost plus a margin supported by a benchmarking set. In FY 2026-27, it quietly changes the margin after a pricing review but keeps the same comparables and no new analysis.

One officer, reading the final Form 3CEB and the first Form 48 together, will ask why the policy moved. If the answer is a genuine change in functions, it should be written down when it happens. If the answer is convenience, the first report of the new regime has just become a weak point.

What to do before 31 October, and in the months after

The final Form 3CEB needs finishing first. Year one under the new Act needs a plan that starts now, not in March 2027.

• Plan around the Saturday. 31 October 2026 falls on a Saturday, so aim for accountant sign-off by Friday and keep a buffer for portal acceptance.

• Reconcile the report to the books. Check every reported transaction against invoices, true-ups and credit notes, including adjustments raised after 31 March 2026 that belong to FY 2025-26.

• Confirm the tolerance band. A notified band of 1% for wholesale trading and 3% otherwise applied for AY 2025-26. I have not verified the notification for AY 2026-27, so check it before relying on it.

• Check the master file calendar. Adviser sources give 30 November 2026 for Form 3CEAA, with the filer intimation in Form 3CEAB due earlier, so confirm eligibility now.

• Use new section references from April 2026. Contracts, policies and ERP labels for FY 2026-27 should cite sections 161 to 173 and Rule 84, not 92B or Rule 10D.

• Start Form 48 data capture in the current year. Collect margins, benchmarking outcomes and functional analysis as the year runs, not after it ends.

• Document any policy change when it happens. The first Form 48 will sit next to the last Form 3CEB, so explain differences in real time.

• Diarise the new date. On the proposed wording, the first Form 48 falls due on 31 October 2027.

A year's transfer pricing is only as strong as the evidence that was written down while it was happening.

Research basis

This article reflects the position as of 25 October 2026. The repeal date, the year-to-Act split, the 31 October and 30 November dates for transfer pricing cases, and the effect of section 536 come from the CBDT's transition FAQs, which I read in full. The FAQs are guidance, not a binding interpretation. Section numbers for the 2025 Act come from the Income Tax Department's section pages and adviser commentary seen as search excerpts. Details of Circular 07/2026, Form 48, Rule 85, the master file dates and the tolerance band rest on press releases and adviser commentary, and I did not read the circular or the final Form 48. Views on audit behaviour are my professional opinion, not law.