Draft Income Tax Rule 81 – Determination of arm’s length price in certain cases

Rule 81 of the Draft Income-tax Rules, 2026 lays down the mechanism for determining the arm’s length price (ALP) where application of the most appropriate transfer pricing method results in more than one comparable price. In such cases, all identified prices are arranged in ascending order to create a dataset. Where the Resale Price Method, Cost Plus Method, or Transactional Net Margin Method is applied and comparable uncontrolled transactions span multiple financial years, weighted average prices are computed based on specified factors such as sales, costs, assets, or other relevant bases. ...