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If you receive a draft assessment order proposing an adjustment, you generally have 30 days from the date you receive it to choose one of two statutory routes: accept the variations and notify the Assessing Officer (AO), or object to the variations before both the Dispute Resolution Panel (DRP) and the AO. Missing the deadline or filing with only one of the required recipients can remove the practical opportunity to use the DRP route.
First establish whether your proceeding is governed by section 144C of the Income-tax Act, 1961 or the corresponding section 275 of the Income-tax Act, 2025. The applicable tax year, commencement provisions and transition rules matter. This is general procedural information, not a recommendation to accept or challenge any particular adjustment.
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What a draft assessment order means
A draft assessment order is not the final assessment order. It sets out the income, loss, tax and proposed variations that the AO intends to adopt for an eligible assessee. The statutory DRP mechanism gives the assessee a short period to accept those variations or challenge them before the final order is issued.
The route is available only where the statutory definition of “eligible assessee” is met and the draft proposes a variation prejudicial to the assessee. Do not assume that every taxpayer receiving a proposed adjustment can use the DRP process.
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Identify the governing law before calculating the deadline
| Question | Section 144C framework | Section 275 framework |
|---|---|---|
| Statute | Income-tax Act, 1961 | Income-tax Act, 2025 |
| Function | Draft order, acceptance or objections, DRP directions and final assessment | Corresponding draft-order and DRP procedure for proceedings governed by the 2025 Act |
| Response period | 30 days from receipt of the draft order | 30 days from receipt of the draft order |
| Important date issue | Apply the law governing the relevant proceeding and any transition rule | The department’s section 275 text records amendments effective 1 April 2026; confirm how commencement rules apply to your case |
Do not decide solely from the heading on the notice. Check the assessment year, the statute cited in the draft, the date and manner of service, and whether a transition provision changes the applicable procedure. If the document cites both Acts or the position is unclear, obtain advice promptly rather than waiting for the deadline to approach.
Who can use the DRP route?
Eligibility is a threshold issue. Under the 1961 Act framework, an eligible assessee includes a person whose proposed variation arises as a consequence of an order of the Transfer Pricing Officer (TPO), and a non-resident other than a company or a foreign company, subject to the statutory exclusions. The exact category and exclusions must be tested against the facts of the proceeding.
Section 275 of the 2025 Act sets out corresponding eligible-assessee categories and exclusions. A non-resident may not qualify merely because it is non-resident, and the TPO-related category depends on the variation actually arising from the relevant TPO order. Read the definition in the statute governing your proceeding rather than relying on a general description.
Eligibility checks
- Confirm the assessment year and the Act under which the assessment is being completed.
- Identify whether the draft variation is a consequence of a TPO order.
- If relying on non-resident status, check the statutory wording and exclusions, including the entity classification described in the applicable Act.
- Verify that the document is a draft order issued under the DRP provisions, not a final assessment order or another notice with a different remedy.
- Record the date and evidence of receipt before doing anything else.
Your 30-day response window
The clock runs from receipt of the draft order. Section 144C(2) and section 275(2) both provide a 30-day period. The 2025 Act states: “On receipt of the draft order, the eligible assessee shall, within thirty days of its receipt by him,—” The date printed on the order is not a safe substitute for the date on which it was served or made available to you.
Save the portal message, email, electronic service record or other service evidence showing when the draft reached you. If there are multiple service events, ask a tax professional to assess which event controls; do not assume that a later download restarts the statutory period. The materials available for 2026 do not establish a general extension mechanism, so plan on the basis that the 30-day limit is firm.
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Calendar the last day
- Write down the date on which the draft was received according to the service record.
- Count 30 days under the applicable statutory computation rules and mark an earlier internal filing date.
- Allow time for reviewing the computation, obtaining supporting records, approving grounds and completing the required electronic or other filing steps.
- Keep a copy of every submission and the acknowledgement showing date, time and recipient.
The two statutory choices
| Route | What you communicate | Required recipient or recipients | Main consequence |
|---|---|---|---|
| Accept | Acceptance of the proposed variations | Assessing Officer | The AO proceeds to complete the assessment on the draft-order basis, subject to the applicable timing provisions |
| Object | Objections to the proposed variations | Both the DRP and the Assessing Officer | The DRP considers the objections and issues directions that bind the AO |
The choice is not a formality. Acceptance gives up the opportunity to contest those proposed variations through the DRP procedure. An objection filing preserves the statutory review route but exposes the case to the DRP’s power to confirm, reduce or enhance the proposed variations.
Step-by-step: responding to the draft order
1. Secure the complete record
Download the draft order and all schedules, computations, annexures and referenced TPO material. Gather the return, earlier submissions, notices, replies, agreements, invoices, financial statements and evidence supporting each disputed item. A draft that summarizes an adjustment may rely on a separate document; locate the underlying document before deciding whether the variation is acceptable.
2. Reconcile every proposed variation
Prepare a working schedule that identifies the issue, amount, tax effect, reasoning in the draft, your position, supporting evidence and the relief sought. Separate transfer-pricing adjustments from non-transfer-pricing additions, disallowances, interest and consequential computations. Check that the total proposed income and tax reconcile to the draft order.
3. Test eligibility and the applicable Act
Use the definitions and exclusions in section 144C or section 275, as applicable. If the draft is inconsistent about the governing law or your eligibility, flag that issue immediately. A jurisdictional objection may affect the route, but it should not be left until after the 30-day period.
4. Decide whether to accept or object
Acceptance may be appropriate where the variations are not disputed or the cost and risk of litigation outweigh the issue. Objection may be appropriate where the draft contains a material factual, legal, computational or transfer-pricing error and you can support the challenge. The statute does not provide a universal answer; the decision depends on the draft order, evidence, amounts, precedent and risk tolerance.
5. File to the correct recipients
If accepting, communicate acceptance to the AO within 30 days. If objecting, file the objections with both the DRP and the AO within the same 30-day period. A copy sent only to the AO, only to the DRP, or only to a generic portal inbox does not match the statutory wording. Follow the current filing channel and preserve separate acknowledgements where the system generates them.
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Keep the filed objections, attachments, digital signature or verification record, payment or filing reference if any, and delivery acknowledgements. Monitor the portal and registered communication address for defect notices, hearing notices and DRP directions. A filing receipt proves submission; it does not prove that every annexure was readable or that a defect was cured.
How to organize objections
The legislation establishes the recipients and deadline, but the available 2026 material does not establish a complete final checklist for pleadings, annexures, verification or portal workflow. The current prescribed format and electronic instructions must therefore be confirmed from the official department instructions applicable to the proceeding. A legacy reference to Form 35A should not be treated as definitive for a section 275 proceeding without checking the final rules.
As a practical, non-exhaustive structure, arrange the filing so that the decision-maker can trace each objection to the exact variation:
- Case particulars: assessment year, taxpayer identification, order date, receipt date, tax authority and the section under which the draft was issued.
- Preliminary grounds: eligibility, jurisdiction, limitation or procedural defects, if supported by the facts and law.
- Issue-by-issue grounds: identify the paragraph and amount in the draft, explain the error, state the correct treatment and request a precise reduction or deletion.
- Evidence index: list each contract, invoice, ledger, report, correspondence, expert analysis or other document and refer to it in the relevant ground.
- Computations: show how the requested relief changes income, tax, interest or related figures.
- Verification and authorization: use the final prescribed method for the applicable year and filing channel.
Do not bury several unrelated adjustments in one general paragraph. Clear issue-by-issue grounds reduce the risk that a material objection is overlooked and make later appellate review easier.
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What happens before the DRP
The DRP is not merely a forwarding office. After a valid objection, it examines the proposed variations and issues directions to the AO. Under section 275, the directions may confirm the variations, reduce them or enhance them. An enhancement can increase the assessed income beyond the amount in the draft, so an objection is not risk-free.
Section 275 requires an opportunity of hearing where directions would be prejudicial to the assessee or to the revenue. Treat a hearing notice as a substantive opportunity: respond to each issue, correct factual misunderstandings, and provide the evidence requested by the panel. If a proposed enhancement or other adverse direction appears during the process, obtain advice on the response and the record needed to protect the objection.
Directions issued by the DRP bind the AO. The AO does not conduct a second merits review of the same variations after receiving directions; the final assessment is completed in accordance with them, subject to the remedies available under the governing law.
DRP and final-order timelines under section 275
| Stage | Statutory timing described in the 2025 Act materials | What to verify |
|---|---|---|
| Acceptance or objections | Within 30 days of receipt of the draft order | Receipt date, applicable Act and current filing instructions |
| DRP directions | Within nine months from the end of the month in which the draft order is forwarded to the eligible assessee under section 275(13) | The forwarding month and any provision affecting computation |
| Final assessment after directions | Section 275(14) provides one month from the end of the month in which the directions are received | The interaction with the time available under section 286 and the full current statute |
| Accepted or unopposed draft | The AO completes the assessment on the draft-order basis | Section 275(4), including its amendment effective 1 April 2026, and the interaction with section 286 |
These periods should not be collapsed into a single guaranteed final-order date. The Finance Act 2026 changes clarify that the time available under section 286 also matters. Apply the complete, current provisions to the particular assessment rather than relying on a one-line deadline calculation.
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| Decision factor | Acceptance | Objection before the DRP |
|---|---|---|
| Position on proposed variations | You agree to the draft variations | You dispute one or more variations |
| Filing burden | Acceptance sent to the AO within 30 days | Detailed objections sent to both the DRP and AO within 30 days |
| Preparation time | Usually less documentation, but the decision still requires checking the computation | Requires issue-by-issue grounds, evidence, authorization and proof of both filings |
| DRP involvement | No DRP merits process | DRP reviews the objections and issues binding directions to the AO |
| Variation risk | The assessment proceeds on the accepted draft basis | The DRP may confirm, reduce or enhance the proposed variations |
| Best question to ask | Are the variations accepted after checking facts, law and arithmetic? | Can each disputed variation be supported by a specific legal and evidentiary objection? |
No route is automatically better. Compare the amount at stake, strength of the evidence, transfer-pricing or other technical issues, cost of preparation, likelihood of a DRP enhancement and the consequences of accepting the adjustment.
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Common mistakes and how to avoid them
Waiting until the 30th day
Portal outages, missing annexures, authorization problems or a defect notice can make a last-day filing unsafe. Set an internal deadline several days earlier and obtain professional review where the adjustment is material.
Filing objections with only one authority
The statutory objection route names both the DRP and the AO. Send the filing through each required channel and retain evidence for each submission.
Assuming silence preserves the challenge
If the assessee accepts the variations or no objection is received within the statutory period, the AO proceeds on the draft-order basis under the applicable provision. Silence is not a substitute for a filed objection.
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Using the wrong law or form
Section 144C guidance for the 1961 Act may not settle the current procedure for a section 275 proceeding. Confirm the final rules, prescribed form, portal steps, verification method and attachment limits for the relevant assessment year.
Objecting generally instead of addressing each variation
A broad statement that the order is wrong does not explain which adjustment is challenged or what relief is requested. Tie every ground to the draft’s paragraph, amount, evidence and correction.
Ignoring the possibility of enhancement
The DRP can enhance variations under section 275. Assess that exposure before filing and prepare to answer any hearing notice concerning a potentially adverse direction.
When professional assistance is sensible
Consider prompt advice from a tax professional when the draft involves a TPO adjustment, a large tax effect, uncertain eligibility, cross-border facts, several linked variations, a disputed receipt date or a possible transition between the 1961 and 2025 Acts. Assistance is particularly valuable when the 30-day period is already running, because eligibility analysis, evidence collection and filing cannot be separated from deadline management.
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One free scan finds every outdated or missing driver and matches the right update for your exact hardware.Free scan · exact hardware matchProvide the adviser with the complete draft, service record, return, TPO order, prior submissions, computations and all portal notices. Ask specifically which Act governs, whether the DRP route is available, what must be filed with each recipient, and how the section 286 timing interaction affects the expected final order.
Quick Recap
A practical final checklist
- Have you identified the assessment year and governing Act?
- Have you confirmed that the taxpayer falls within the applicable eligible-assessee definition and does not fall within an exclusion?
- Have you recorded the date and evidence of receipt?
- Have you calculated the 30-day deadline and set an earlier internal filing date?
- Have you reconciled every proposed variation and its tax effect?
- Have you chosen acceptance or objection deliberately?
- If objecting, have you addressed each variation with a specific ground and supporting evidence?
- Have you checked the final current form, portal instructions and verification requirements?
- Have you filed objections with both the DRP and the AO and retained both acknowledgements?
- Are you monitoring for DRP hearings, requests for information, possible enhancements and directions?
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