Transfer Pricing Documentation
- Home
- Transfer Pricing Documentation
🤝 Introduction to Transfer Pricing – Powered by Tax Ustaad
Transfer Pricing refers to the pricing of transactions between related entities (Associated Enterprises or AEs), especially across borders. It ensures that such transactions are conducted at Arm’s Length Price (ALP) – the price that would be charged between unrelated parties in similar conditions.
India’s transfer pricing regime is governed by:
- Section 92–92 of the Income Tax Act, 1961
- Income Tax Rules, 1962
- OECD’s BEPS Action Plan (adopted via Section 286)
Step 1 - Master File (MF) – Global Overview
| Requirement | Threshold |
|---|---|
| Consolidated group revenue | ₹5500 crore |
| International transactions | ₹50 crore (aggregate) |
- Group structure & business description
- Intangibles and financial arrangements
- Global TP policies and APAs
Form: Form 3CEAA (Part A & B)
Due Date: On or before 31st October of the assessment year
Step 2 - Local File (LF) – India-Specific Transactions
| Requirement | Threshold |
|---|---|
| International transactions | ₹50 crore (aggregate) |
- Nature of controlled transactions
- Functional, economic & comparability analysis
- TP method applied and justification
Form: Maintain internally; submit upon request
Due Date: Must be ready by due date of return filing
Step 3 - Country-by-Country Report (CbCR)
| Requirement | Threshold |
|---|---|
| Consolidated group revenue | ₹5500 crore |
- Global income allocation
- Taxes paid in each jurisdiction
- Key business activities by country
Form: Form 3CEAD
Due Date: On or before 12 months from end of reporting fiscal year
Methods to Determine Arm's Length Price
| Method | Use Case |
|---|---|
| Comparable Uncontrolled Price | Commodity or financial transactions |
| Resale Price Method | Distribution businesses |
| Cost Plus Method | Manufacturing or service contracts |
| Profit Split Method | Integrated operations with shared IP |
| Transactional Net Margin | Most commonly used in India |
| Other Method | As prescribed by CBDT |
Penalties for Non-Compliance
| Category | Penalty |
|---|---|
| Failure to maintain | Up to 2% of transaction value (Sec 271AA) |
| Inaccurate reporting | ₹1,00,000 or more under Sec 271GB |
| Non-filing of CbCR | ₹5000/day (up to ₹5 lakh) |
How Tax Ustaad Helps
- Master File & Local File Preparation
- CbCR Filing & Compliance Advisory
- TP Method Selection & Benchmarking
- Audit Defense & APA Support
- Cross-border Tax Planning
🤝 Our Trust
hello
We build trust with our customers by combining creativity with tailored business Tax solutions.