Who needs a transfer pricing study in India?

Indian companies that have international transactions with associated enterprises (AEs) — parent companies, subsidiaries, or group entities abroad — must maintain transfer pricing documentation if such transactions exceed Rs. 1 crore in aggregate. Form 3CEB (a CA certificate) must be filed along with the income tax return.

What are the transfer pricing methods accepted in India?

The Income Tax Act 2025 (and its predecessor IT Act 1961) recognises six transfer pricing methods: Comparable Uncontrolled Price (CUP), Resale Price Method (RPM), Cost Plus Method (CPM), Profit Split Method (PSM), Transactional Net Margin Method (TNMM), and Other Method. TNMM is the most commonly used method in India.

What is the penalty for transfer pricing non-compliance in India?

Penalties for transfer pricing non-compliance include: 2% of international transaction value for failure to maintain documentation; 2% of international transaction value for failure to report transactions; and 100–300% of tax evaded for underreporting attributable to transfer pricing adjustments. These are in addition to tax and interest on the adjustment.

🌐 Direct Tax · Transfer Pricing

Transfer Pricing Services India

Transfer pricing compliance for Indian companies with cross-border related-party transactions — TP study reports, Form 3CEB, benchmarking analysis, advance pricing agreements, and representation in TP assessments before the Transfer Pricing Officer and the Dispute Resolution Panel.

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What We Cover

Our Services

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Transfer Pricing Study Report

Comprehensive TP documentation covering entity characterisation, functional analysis, comparability analysis, selection of the most appropriate method (CUP, RPM, TNMM, CPM, PSM), and benchmarking of arm's length price.

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Form 3CEB Certification

Mandatory CA certification in Form 3CEB to be filed along with the income tax return for entities with international transactions above Rs.1 crore. Prepared and certified by our CA team.

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Benchmarking Analysis

Economic benchmarking using CMIE Prowess, CRISIL, or comparable databases. Identification of comparables, rejection of non-comparables, and derivation of the arm's length range for the relevant transaction.

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APA — Advance Pricing Agreement

Unilateral and bilateral APA applications to CBDT for certainty on the arm's length price for future years. APA eliminates TP audit risk for covered transactions and is typically valid for 5 years.

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TP Assessment Representation

Representation before the Transfer Pricing Officer (TPO) during TP audit. Analysis of the TPO's proposed adjustment, filing of objections, and presentation of alternative benchmarking analysis.

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Dispute Resolution Panel (DRP)

DRP objections against proposed TP adjustments. The DRP provides a faster dispute resolution mechanism than CIT(A) for TP matters, with panel members from CBDT.

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Country-by-Country Reporting (CbCR)

CbCR and Master File documentation for Indian entities that are constituent entities of MNC groups with consolidated revenue above Rs.5,500 crore. Form 3CEFA and Form 3CEFB filing.

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Safe Harbour Advisory

Analysis of eligibility for Safe Harbour provisions under Rules 10TD/10TE for software development, KPO, contract R&D, and other eligible services. Safe Harbour eliminates TP audit risk for covered transactions.

How We Work

Simple Process

Transaction Mapping

We identify all international transactions with related parties — services, goods, loans, guarantees, royalties, management fees.

Functional Analysis

Functional and risk profile of each entity in the transaction is documented to determine the appropriate transfer pricing method.

Benchmarking

Comparable companies or transactions identified through database search. Statistical range of arm's length prices computed.

Report & Form 3CEB

TP documentation report prepared and Form 3CEB certified — filed with ITR by the October 31 / November 30 due date.

Assessment Support

If selected for TP audit, we represent before TPO with the documentation, additional analysis, and legal submissions.

Common Questions

Frequently Asked Questions

Transfer pricing regulations under Sections 92 to 92F of the Income Tax Act apply to every Indian company that has undertaken international transactions with associated enterprises (related parties) during the year, if the aggregate value of such transactions exceeds Rs.1 crore. Domestic transfer pricing provisions apply to specified domestic transactions above Rs.20 crore. Form 3CEB certification and TP documentation are mandatory for all companies crossing these thresholds.

Form 3CEB is a report by a Chartered Accountant certifying that the prescribed particulars of international transactions and specified domestic transactions have been correctly reported and that the arm's length price has been determined in accordance with the Income Tax Rules. It must be filed electronically on or before the income tax return due date — 30 November for companies with international transactions (or 31 October for other companies if TP provisions are not triggered).

Non-filing of Form 3CEB attracts a penalty of 2% of the value of the international transactions. Failure to maintain TP documentation attracts a penalty of 2% of the transaction value. If a TP adjustment is made and the taxpayer fails to establish that it was at arm's length, a penalty of 50% of the tax on the adjusted income applies. In cases of concealment or misreporting, the penalty is 200% of the tax on adjusted income.

An Advance Pricing Agreement (APA) is a binding agreement between a taxpayer and the tax authority (CBDT) on the arm's length price or pricing methodology for covered international transactions for a specified future period (typically 5 years, extendable). A Unilateral APA involves only India. A Bilateral APA involves India and the other country's tax authority and eliminates double taxation risk. The APA process typically takes 2–3 years to complete from application to execution but provides complete certainty on TP for covered transactions.

Yes. Indian subsidiaries of foreign multinationals are frequently selected for TP audit, particularly when they are characterised as limited risk entities (captive service providers, contract manufacturers) but earn margins above the safe harbour rates, or when the group's overall TP documentation does not adequately support the margins earned in India. Maintaining robust TP documentation aligned with the OECD BEPS Action 13 Master File and Local File framework significantly reduces audit risk.

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Related Services & Guides

Complete Guide

Transfer Pricing in India — TP Study, Form 3CEB & Compliance

Transfer Pricing (TP) refers to the price at which goods, services, IP, and financial instruments are transacted between two related entities (associated enterprises) in different tax jurisdictions. Under Sections 92 to 92F of the Income Tax Act, all international transactions between associated enterprises must be priced at arm's length — i.e., the price that would have been charged between independent parties under similar conditions. The arm's length price is determined using prescribed methods: CUP (Comparable Uncontrolled Price), Resale Price Method, Cost Plus Method, Profit Split Method, or the Transactional Net Margin Method (TNMM).

Indian companies with international transactions or specified domestic transactions exceeding ₹1 crore in aggregate must file Form 3CEB — the Transfer Pricing Accountant's Report — along with their ITR. Form 3CEB must be certified by a Chartered Accountant and outlines each international transaction, the TP method used, comparable data relied upon, and the arm's length price determination. The due date for Form 3CEB filing is 31 October of the assessment year.

A comprehensive Transfer Pricing Study (TP study) documents the functional analysis (functions performed, assets employed, risks assumed by each entity), comparability analysis (selection of comparable companies from databases like Capitaline or TP Catalyst), and economic analysis supporting the arm's length nature of the pricing. The TP study must be maintained as contemporaneous documentation and produced within 30 days of a TP notice. Inadequate documentation invites a TP adjustment with 2% penalty on the transaction value per year.

Shahi & Co. prepares TP studies and Form 3CEB for multinational groups with Indian entities — IT/ITeS companies, manufacturing subsidiaries, captive units, and trading entities. Our TP practice uses current-year comparables from global databases, ensuring defensible arm's length documentation that withstands scrutiny from the Transfer Pricing Officer (TPO).

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Get Transfer Pricing Compliance Right Today

Share your related-party transaction details with us. We will assess your TP risk and propose appropriate documentation and compliance.

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📞 +91-9999 361 351

✉ info@shahiandco.in

📍 Pushp Vihar, New Delhi – 110 062