Transfer Pricing Documentation

What is Transfer Pricing Documentation?

Transfer pricing documentation is mandatory for Indian entities transacting with overseas or domestic related parties above the specified threshold. We prepare TP reports, benchmarking analyses, and assist with Advance Pricing Agreements to provide certainty on arm's-length pricing.

Under Section 92 of the Income Tax Act, 1961, any business with international transactions or specified domestic transactions with associated enterprises (related parties) must compute income from those transactions at the arm's-length price (ALP) and maintain prescribed documentation. The documentation requirement — Form 3CEB, a Master File (Form 3CEAA), and a Local File — kicks in above specified thresholds. The CBDT has adopted the OECD's three-tier documentation structure: Country-by-Country Report (Form 3CEAD) for large Indian constituent entities, the Master File, and the Local File. For ongoing certainty, multinationals and large Indian groups can enter into an Advance Pricing Agreement (APA) with the CBDT — a binding agreement on the transfer pricing methodology for up to five years (bilateral APAs cover the foreign tax authority as well). Transfer pricing adjustments by the assessing officer can result in significant additions to income and interest under Section 234B.

How It Works

1. 1

   Transaction mapping

   We identify all inter-company transactions and confirm which require TP documentation.

2. 2

   Functional and economic analysis

   We analyse the functions, assets, and risks of each entity in the transaction to characterise it correctly.

3. 3

   Method selection and benchmarking

   We select the most appropriate TP method and conduct a benchmarking search using comparable public company databases.

4. 4

   TP report and Form 3CEB

   A complete TP documentation report is prepared and Form 3CEB is signed and filed with the Income Tax return.

5. 5

   APA support (if applicable)

   For groups seeking long-term certainty, we prepare and support the APA filing process with the CBDT.

Fees