Transfer Pricing Documentation

TP documentation is required when the aggregate value of international transactions with associated enterprises exceeds ₹1 crore in a year. Thresholds change — verify for the current year with us.

Form 3CEB is the Accountant's Report that a chartered accountant must file alongside the transfer pricing documentation, certifying that the inter-company transactions have been computed at arm's length.

The Income Tax Act recognises CUP, RPM, Cost Plus Method, Profit Split Method, and TNMM. TNMM is the most widely used method for services transactions.

An APA is a binding agreement between a taxpayer and the CBDT on the transfer pricing method for specified transactions for up to five years, with option to roll-back to four prior years.

Unilateral APAs typically take 12–24 months. Bilateral APAs take 24–36 months or longer.

The officer can add income equal to the ALP shortfall. Interest under Section 234B applies on the incremental tax, and a penalty of 50% of the incremental tax may be imposed. An appeal to the Dispute Resolution Panel can contest the adjustment.