Section 92CE requires an assessee to make a secondary adjustment where a primary adjustment to transfer price has been made suo motu in the return, made by the Assessing Officer and accepted by the assessee, determined by an advance pricing agreement under s. 92CC entered into on or after 1 April 2017, made under the safe harbour rules under s. 92CB, or arises from a mutual agreement procedure under an agreement under s. 90 or s. 90A.
The section does not apply where the primary adjustment in a previous year does not exceed one crore rupees, or where it relates to an assessment year commencing on or before 1 April 2016. A secondary adjustment is an adjustment in the books of the assessee and its associated enterprise so that the actual allocation of profits matches the transfer price determined in the primary adjustment.
Operative consequences
Where the primary adjustment increases total income or reduces loss, the excess money with the associated enterprise, if not repatriated within the prescribed time, is deemed to be an advance by the assessee, and interest on it is computed in the prescribed manner (sub-section (2)). It may be repatriated from any non-resident associated enterprise.
The assessee may instead opt to pay additional income-tax at eighteen per cent on the unrepatriated excess money (sub-section (2A)); that payment is final, with no credit to anyone, no deduction for the amount, and no further secondary adjustment or interest from the date of payment (sub-sections (2B) to (2D)).
No refund is allowed of tax paid under the sub-section as it stood before its amendment by the Finance (No. 2) Act, 2019 (second proviso to sub-section (1)).
Status
Operative for assessment year 2026-27. The Finance Act, 2026 does not amend this section.
The 1961 Act governs assessment year 2026-27 and earlier years; the Income-tax Act, 2025 governs tax year 2026-27 onwards, and for this subject the 2025 Act provision is s. 170. Section 170(1) applies to primary adjustments of "one crore rupees or more".
Case Laws & Commentary
SECTION 92CE — SECONDARY ADJUSTMENT IN CERTAIN CASES
Case Laws & Commentary (Income-tax Act, 1961 as amended by Finance Act, 2026)
A. SECTION COMMENTARY
A.1 Structural position & legislative purpose
Section 92CE, inserted by the Finance Act, 2017 (w.e.f. 1-4-2018, i.e. AY 2018-19), introduced the concept of a 'secondary adjustment' into Indian TP law, aligning it with OECD practice. Where a 'primary adjustment' to the transfer price is made (by the assessee in its return, by the AO/TPO and accepted, under an APA, under safe harbour, or under a Mutual Agreement Procedure resolution), the section requires a corresponding SECONDARY adjustment — the excess money that should have come to India but did not (the difference between the ALP and the price actually recorded) is treated as an advance/notional loan from the assessee to its AE, on which interest is imputed if the money is not repatriated to India within the prescribed time.
The object is to ensure that the cash position reflects the primary adjustment — i.e. to neutralise the benefit the AE retained abroad. Sub-section (2) deems the un-repatriated excess to be an advance and charges imputed interest (at a prescribed rate); the Finance (No.2) Act, 2019 added sub-section (2A), giving the assessee a one-time option to pay an additional tax (at a flat rate, plus surcharge) on the un-repatriated amount in lieu of the recurring interest, after which no further secondary adjustment/interest is required. Thresholds (primary adjustment up to Rs.1 crore, and pre-AY 2017-18 adjustments) are excluded by the provisos.
A.2 Sub-section / clause taxonomy
Sub-section (1): Where a primary adjustment to the transfer price has been made in the specified circumstances (suo motu by the assessee; by the AO and accepted; under an APA under s.92CC; as per safe harbour under s.92CB; arising from a MAP resolution under a DTAA), the assessee shall make a secondary adjustment. Provisos exclude primary adjustments not exceeding Rs.1 crore and those relating to AY 2016-17 or earlier.
Sub-section (2): Where, as a consequence of the primary adjustment, there is an increase in the total income / reduction in loss, the excess money (or part thereof) available with the AE, if not repatriated to India within the prescribed time, shall be deemed to be an advance made by the assessee to the AE, and interest shall be computed on such advance at the prescribed rate, in the prescribed manner.
Sub-section (2A) [FA(No.2) 2019]: Where the excess money is not repatriated within the prescribed time, the assessee may, at its option, pay additional income-tax at 18% (plus surcharge of 12%) on such excess money in lieu of interest; on such payment, no further secondary adjustment or interest computation is required and no deduction/credit is allowed for that additional tax.
Sub-section (3): Defines 'associated enterprise', 'arm's length price', 'excess money', 'primary adjustment' and 'secondary adjustment' for the purposes of the section.
A.3 Core doctrinal themes
Theme (1) — Cash repatriation focus: unlike the primary adjustment (which changes taxable income), the secondary adjustment targets the CASH that remained with the AE; non-repatriation triggers a deemed loan and imputed interest.
Theme (2) — One-time-tax option (sub-section (2A)): a pragmatic exit from recurring interest by paying a flat additional tax; an important planning choice where repatriation is impractical.
Theme (3) — Thresholds and prospectivity: the Rs.1 crore de minimis and the AY 2017-18 starting point limit the section's reach; pre-2017 adjustments are outside it.
Theme (4) — Newness / limited litigation: being a 2018-onwards provision, appellate jurisprudence is still thin; current disputes concern the repatriation-time computation, the interest rate, and applicability to APA/MAP-driven primary adjustments.
FA 2017 (w.e.f. 1-4-2018 / AY 2018-19): Section 92CE inserted — secondary adjustment, deemed advance and imputed interest; Rs.1 crore and AY 2016-17 carve-outs.
FA(No.2) 2019 (w.e.f. 1-9-2019, with retrospective clarifications): Sub-section (2A) inserted (one-time 18% additional tax option); clarificatory amendments on 'excess money' (per-AE computation) and repatriation.
Rule 10CB: Prescribes the time limit for repatriation and the rate of interest (linked to benchmark rates depending on the currency of the international transaction).
FA 2026: No amendment to s.92CE; the secondary-adjustment regime is preserved.
A.5 CA practitioner pointers
(1) Whenever a primary adjustment above Rs.1 crore arises (return, accepted AO adjustment, APA, safe harbour, or MAP) for AY 2018-19 onward, evaluate the secondary-adjustment obligation immediately.
(2) Repatriate the excess money within the Rule 10CB time limit to avoid the deemed-loan/interest; if repatriation is not feasible, model the sub-section (2A) one-time 18%+surcharge tax against the cumulative interest cost.
(3) Compute imputed interest at the Rule 10CB rate appropriate to the currency of the underlying transaction; document repatriation evidence.
B. FA 2026 IMPACT NOTE
Section 92CE is NOT amended by the Finance Act, 2026. The secondary-adjustment mechanism (deemed advance, imputed interest under Rule 10CB, and the one-time 18% additional-tax option) continues for AY 2026-27 onward.
No FA 2026 change to the Rs.1 crore threshold, the AY 2018-19 commencement, or the one-time-tax rate; practitioners apply the existing framework.
C. CASE LAW — CLUSTERED BY ISSUE
Section 92CE is a relatively recent (AY 2018-19) provision; reported High Court / Supreme Court authority directly construing it remains limited, and most guidance is administrative (Rule 10CB, CBDT clarifications) and at the DRP/ITAT level on computation issues. The candid position is stated rather than supported by off-point citations. The contextual framework and the principal compliance touch-points are summarised below.
Cluster C-1 : Mechanics of the secondary adjustment (contextual / administrative)
1. Secondary-adjustment framework — s.92CE read with Rule 10CB and the FA(No.2) 2019 clarifications
Facts: Following a qualifying primary adjustment (above Rs.1 crore, AY 2018-19 onward), the excess money not repatriated within the Rule 10CB time limit is deemed an advance to the AE attracting imputed interest, unless the assessee opts for the one-time 18% (+12% surcharge) additional tax.
Issue: How the secondary adjustment is computed and discharged where the excess money is not brought back to India.
Held: The framework deems the un-repatriated excess a loan and charges interest at the Rule 10CB rate (currency-linked); alternatively, the one-time additional tax under sub-section (2A) extinguishes the recurring interest obligation, with no deduction/credit for that tax.
Ratio: The secondary adjustment enforces cash alignment with the primary adjustment; repatriation or the one-time tax are the two routes to closure.
Relevance: Operative compliance position under s.92CE; applied via the Rules pending development of appellate jurisprudence.
D. PRACTITIONER'S NOTE
Compliance flow: (1) identify qualifying primary adjustment (>Rs.1 crore, AY 2018-19+); (2) compute 'excess money' per AE; (3) repatriate within Rule 10CB time; (4) if not repatriated, either compute imputed interest (recurring) or elect the one-time 18%+surcharge tax under sub-section (2A); (5) retain repatriation/payment evidence.
Candid note: jurisprudence is still maturing. Document the repatriation timeline meticulously, as the principal current disputes concern when the clock starts and the applicable interest rate/currency.
E. SOURCES & CITATIONS
Caveat: This material is treatise-style commentary for practitioners and academic use. It is not legal opinion. Verify the current text, the latest CBDT circulars/notifications and the most recent appellate position before relying on any proposition in assessment, audit (Form 3CEB) or litigation.
Function in the statutory architecture
Section 92CE requires an assessee to make a secondary adjustment where a primary adjustment to transfer price has been made suo motu in the return, made by the Assessing Officer and accepted by the assessee, determined by an advance pricing agreement under s. 92CC entered into on or after 1 April 2017, made under the safe harbour rules under s. 92CB, or arises from a mutual agreement procedure under an agreement under s. 90 or s. 90A.
The section does not apply where the primary adjustment in a previous year does not exceed one crore rupees, or where it relates to an assessment year commencing on or before 1 April 2016. A secondary adjustment is an adjustment in the books of the assessee and its associated enterprise so that the actual allocation of profits matches the transfer price determined in the primary adjustment.
Operative consequences
Status
Operative for assessment year 2026-27. The Finance Act, 2026 does not amend this section.
The 1961 Act governs assessment year 2026-27 and earlier years; the Income-tax Act, 2025 governs tax year 2026-27 onwards, and for this subject the 2025 Act provision is s. 170. Section 170(1) applies to primary adjustments of "one crore rupees or more".
Case Laws & Commentary
SECTION 92CE — SECONDARY ADJUSTMENT IN CERTAIN CASES
Case Laws & Commentary (Income-tax Act, 1961 as amended by Finance Act, 2026)
A. SECTION COMMENTARY
A.1 Structural position & legislative purpose
Section 92CE, inserted by the Finance Act, 2017 (w.e.f. 1-4-2018, i.e. AY 2018-19), introduced the concept of a 'secondary adjustment' into Indian TP law, aligning it with OECD practice. Where a 'primary adjustment' to the transfer price is made (by the assessee in its return, by the AO/TPO and accepted, under an APA, under safe harbour, or under a Mutual Agreement Procedure resolution), the section requires a corresponding SECONDARY adjustment — the excess money that should have come to India but did not (the difference between the ALP and the price actually recorded) is treated as an advance/notional loan from the assessee to its AE, on which interest is imputed if the money is not repatriated to India within the prescribed time.
The object is to ensure that the cash position reflects the primary adjustment — i.e. to neutralise the benefit the AE retained abroad. Sub-section (2) deems the un-repatriated excess to be an advance and charges imputed interest (at a prescribed rate); the Finance (No.2) Act, 2019 added sub-section (2A), giving the assessee a one-time option to pay an additional tax (at a flat rate, plus surcharge) on the un-repatriated amount in lieu of the recurring interest, after which no further secondary adjustment/interest is required. Thresholds (primary adjustment up to Rs.1 crore, and pre-AY 2017-18 adjustments) are excluded by the provisos.
A.2 Sub-section / clause taxonomy
Sub-section (1): Where a primary adjustment to the transfer price has been made in the specified circumstances (suo motu by the assessee; by the AO and accepted; under an APA under s.92CC; as per safe harbour under s.92CB; arising from a MAP resolution under a DTAA), the assessee shall make a secondary adjustment. Provisos exclude primary adjustments not exceeding Rs.1 crore and those relating to AY 2016-17 or earlier.
Sub-section (2): Where, as a consequence of the primary adjustment, there is an increase in the total income / reduction in loss, the excess money (or part thereof) available with the AE, if not repatriated to India within the prescribed time, shall be deemed to be an advance made by the assessee to the AE, and interest shall be computed on such advance at the prescribed rate, in the prescribed manner.
Sub-section (2A) [FA(No.2) 2019]: Where the excess money is not repatriated within the prescribed time, the assessee may, at its option, pay additional income-tax at 18% (plus surcharge of 12%) on such excess money in lieu of interest; on such payment, no further secondary adjustment or interest computation is required and no deduction/credit is allowed for that additional tax.
Sub-section (3): Defines 'associated enterprise', 'arm's length price', 'excess money', 'primary adjustment' and 'secondary adjustment' for the purposes of the section.
A.3 Core doctrinal themes
Theme (1) — Cash repatriation focus: unlike the primary adjustment (which changes taxable income), the secondary adjustment targets the CASH that remained with the AE; non-repatriation triggers a deemed loan and imputed interest.
Theme (2) — One-time-tax option (sub-section (2A)): a pragmatic exit from recurring interest by paying a flat additional tax; an important planning choice where repatriation is impractical.
Theme (3) — Thresholds and prospectivity: the Rs.1 crore de minimis and the AY 2017-18 starting point limit the section's reach; pre-2017 adjustments are outside it.
Theme (4) — Newness / limited litigation: being a 2018-onwards provision, appellate jurisprudence is still thin; current disputes concern the repatriation-time computation, the interest rate, and applicability to APA/MAP-driven primary adjustments.
A.4 Legislative evolution / Finance Act amendment trail
FA 2017 (w.e.f. 1-4-2018 / AY 2018-19): Section 92CE inserted — secondary adjustment, deemed advance and imputed interest; Rs.1 crore and AY 2016-17 carve-outs.
FA(No.2) 2019 (w.e.f. 1-9-2019, with retrospective clarifications): Sub-section (2A) inserted (one-time 18% additional tax option); clarificatory amendments on 'excess money' (per-AE computation) and repatriation.
Rule 10CB: Prescribes the time limit for repatriation and the rate of interest (linked to benchmark rates depending on the currency of the international transaction).
FA 2026: No amendment to s.92CE; the secondary-adjustment regime is preserved.
A.5 CA practitioner pointers
(1) Whenever a primary adjustment above Rs.1 crore arises (return, accepted AO adjustment, APA, safe harbour, or MAP) for AY 2018-19 onward, evaluate the secondary-adjustment obligation immediately.
(2) Repatriate the excess money within the Rule 10CB time limit to avoid the deemed-loan/interest; if repatriation is not feasible, model the sub-section (2A) one-time 18%+surcharge tax against the cumulative interest cost.
(3) Compute imputed interest at the Rule 10CB rate appropriate to the currency of the underlying transaction; document repatriation evidence.
B. FA 2026 IMPACT NOTE
Section 92CE is NOT amended by the Finance Act, 2026. The secondary-adjustment mechanism (deemed advance, imputed interest under Rule 10CB, and the one-time 18% additional-tax option) continues for AY 2026-27 onward.
No FA 2026 change to the Rs.1 crore threshold, the AY 2018-19 commencement, or the one-time-tax rate; practitioners apply the existing framework.
C. CASE LAW — CLUSTERED BY ISSUE
Section 92CE is a relatively recent (AY 2018-19) provision; reported High Court / Supreme Court authority directly construing it remains limited, and most guidance is administrative (Rule 10CB, CBDT clarifications) and at the DRP/ITAT level on computation issues. The candid position is stated rather than supported by off-point citations. The contextual framework and the principal compliance touch-points are summarised below.
Cluster C-1 : Mechanics of the secondary adjustment (contextual / administrative)
1. Secondary-adjustment framework — s.92CE read with Rule 10CB and the FA(No.2) 2019 clarifications
Facts: Following a qualifying primary adjustment (above Rs.1 crore, AY 2018-19 onward), the excess money not repatriated within the Rule 10CB time limit is deemed an advance to the AE attracting imputed interest, unless the assessee opts for the one-time 18% (+12% surcharge) additional tax.
Issue: How the secondary adjustment is computed and discharged where the excess money is not brought back to India.
Held: The framework deems the un-repatriated excess a loan and charges interest at the Rule 10CB rate (currency-linked); alternatively, the one-time additional tax under sub-section (2A) extinguishes the recurring interest obligation, with no deduction/credit for that tax.
Ratio: The secondary adjustment enforces cash alignment with the primary adjustment; repatriation or the one-time tax are the two routes to closure.
Relevance: Operative compliance position under s.92CE; applied via the Rules pending development of appellate jurisprudence.
D. PRACTITIONER'S NOTE
Compliance flow: (1) identify qualifying primary adjustment (>Rs.1 crore, AY 2018-19+); (2) compute 'excess money' per AE; (3) repatriate within Rule 10CB time; (4) if not repatriated, either compute imputed interest (recurring) or elect the one-time 18%+surcharge tax under sub-section (2A); (5) retain repatriation/payment evidence.
Candid note: jurisprudence is still maturing. Document the repatriation timeline meticulously, as the principal current disputes concern when the clock starts and the applicable interest rate/currency.
E. SOURCES & CITATIONS
Caveat: This material is treatise-style commentary for practitioners and academic use. It is not legal opinion. Verify the current text, the latest CBDT circulars/notifications and the most recent appellate position before relying on any proposition in assessment, audit (Form 3CEB) or litigation.