CROSS BORDER TRANSACTIONS
Transfer Pricing Advisory in India
Connect group transactions to the commercial facts, supporting records and pricing analysis. Build documentation your team can explain.
What needs a transfer pricing review?
Check the associated enterprise relationship and the legal scope of each transaction before selecting a method. Group ownership alone does not describe every reporting obligation.
| Transaction to review | Records to prepare |
|---|---|
| Services between group companies | Agreements, invoices, work records, cost allocation and evidence of the recipient’s benefit |
| Goods purchased or sold within the group | Product details, terms, volumes, margins and available independent comparisons |
| Loans, guarantees and finance arrangements | Currency, term, security, credit position, agreements and commercial purpose |
| Royalties and intellectual property | Rights granted, actual use, contractual terms and the functions performed by each entity |
| Specified domestic transactions | The statutory category, relationship and aggregate value for the relevant period |
For example, a parent management charge needs more than an invoice. Preserve the service records and explain how the allocation relates to the Indian business. A routine software service arrangement needs an analysis of what the Indian team actually does and which risks it bears.
Form 3CEB and Form 48
The move to the Income Tax Act 2025 makes the reporting period important. The new Act applies from 1 Apr 2026. Earlier periods continue under the applicable transition rules. A filing made during 2026 is not automatically a filing under the new Act.
The department maps Form 3CEB under the older rules to Form 48 under the 2026 rules. Form 48 relates to section 172 of the new Act. Confirm the period, applicable framework and current filing instructions with the reporting accountant.
Check the accountant’s report deadline separately from the income tax return deadline. Confirm any official extension for that period before planning the filing.
Sources checked 17 Sep 2026: Income Tax Department transition guidance and official form mapping.
The work to agree before starting
Transaction and documentation review
Identify the parties, transaction categories and reporting periods. Review the functions, assets and risks of the Indian company. Agree the pricing analysis and the records needed to support it.
Benchmarking and pricing method
Select the method based on the transaction and reliable comparable information. Document the search, selection and adjustments. Explain material differences between the contracts, the accounts and actual conduct.
Accountant reporting
Reconcile the transaction schedule with the financial records. Agree who prepares, certifies and files the applicable report. Confirm which work the appointed accountant requires before signing.
Group reporting and elections
Review master file and country by country reporting separately. These have their own applicability conditions. Assess safe harbour, an advance pricing agreement or an available multiyear option only after checking eligibility and commercial suitability.
Support for a notice
Preserve the notice and its response deadline. Build a record of the transactions, methodology and supporting evidence. Agree the response scope and the authorised representative before work begins.
What to send for an initial review
- The group ownership chart and the Indian company’s business description.
- The relevant reporting periods and any existing notices.
- Agreements and a transaction schedule showing the counterparties and amounts.
- Financial statements, relevant ledgers and available segment information.
- Earlier transfer pricing studies, accountant reports and group policies.
Share confidential records through the agreed document channel after the engagement scope is clear.
Fees and responsibility
Request a written proposal with named deliverables. Separate the study, database work, certification, filing and notice responses. Ask who supplies missing records and who approves the final transaction schedule.
The work depends on the number of entities, periods and transaction categories. Incomplete records or a live dispute can change the scope. Confirm additional work before it starts.
Engagement guide · Reviewed 22 Sep 2026
Transfer pricing work that connects to the accounts
Transfer pricing is the analysis and documentation of pricing for covered transactions between associated enterprises. The work starts with the actual functions, assets and risks. A contract label or a standard markup is not enough to establish an arm's length result.
| Workstream | Records or deliverables |
|---|---|
| Group service revenue | Agreement, functions, cost base, allocation keys and segmented margin |
| Management or support fees | Evidence of services, benefit, allocation and invoices |
| Royalty or intellectual property | Rights granted, economic ownership, functions and payment basis |
| Financing and guarantees | Terms, currency, tenure, credit profile and security |
Identify the transactions before benchmarking
List group sales, purchases, development services, management charges, royalties, financing, guarantees and reimbursements. Reconcile the list to the ledger and agreements. Identify any transactions that may be deemed international transactions under the applicable rules.
Review the relationship between the parties and the reporting period. International transactions and specified domestic transactions have different scope tests. Avoid treating every domestic related party payment as automatically reportable.
Build the functional analysis
Interview the people who run the activity. Record who negotiates contracts, owns intellectual property, supervises staff, funds operations and bears commercial risks. Compare those facts with the written agreement and accounting treatment.
A routine services label can be inappropriate where the Indian company controls significant decisions or develops valuable assets. Resolve that mismatch before selecting the tested party, method and comparables.
Select and document the pricing method
Evaluate the available methods against the transaction and reliable data. The benchmarking file should explain the search, rejected companies, financial filters, period, adjustments and limitations. Retain the evidence behind the result so another reviewer can follow it.
A benchmark from a previous year is a starting point for review. Check business changes, segmented accounts, exceptional costs and the continued suitability of the comparison. Agree how any adjustment will flow through invoices and books.
Separate documentation from the accountant's report
The study, tax computation and statutory accountant's report serve different purposes. Agree who prepares each component and who signs the report. Any required statutory report is signed by the separately appointed professional. Krystal7 Consultants prepares and coordinates the agreed supporting work.
For assessment year 2026 to 2027 work under the earlier Act, the department publishes Form 3CEB. For tax years governed by the Income Tax Act, 2025, confirm the current form mapping and rules. Do not reuse a prior year's form number or deadline without checking the applicable period.
Prepare for questions from the tax authority
Maintain agreements, invoices, segmented results, supporting calculations and the comparable search record. A response should explain both the commercial facts and the numerical reconciliation. Submission receipts and notices belong in the same case record.
Representation, litigation, an advance pricing agreement and work for other group entities require an agreed additional scope. We first assess the transaction profile and records before estimating that work.
Reference checked 22 Sep 2026: Income Tax Department forms by applicable Act. Apply the rules for the relevant reporting period.
Transfer pricing questions
Does a small Indian subsidiary need transfer pricing compliance?
A small payment does not automatically remove a covered international transaction from transfer pricing reporting. First establish the relationship between the parties and the nature of the transaction. Reporting, detailed documentation and group reporting have different tests.
Should we use Form 3CEB or Form 48?
The relevant reporting period determines the form. Form 3CEB belongs to the 1961 Act framework. Form 48 is the accountant’s report under section 172 of the 2025 Act. Confirm the applicable Act, tax period and filing instructions before preparing the report.
Does a management fee from our overseas parent need support?
Yes. Keep the agreement, evidence of the services, the allocation method and the reason for the charge. The analysis should explain the benefit to the Indian company and support the price. A group invoice alone does not explain those facts.
Does safe harbour remove all audit risk?
No. Safe harbour depends on eligible transactions, the applicable period and compliance with prescribed conditions. It does not provide a blanket exemption from tax review. Compare its requirements with ordinary benchmarking before making an election.
Can an overseas group study cover the Indian subsidiary?
It can provide useful evidence, but it needs an Indian review. Check the local functions, assets, risks, transaction records and reporting requirements. Reconcile the analysis with the Indian accounts and the transactions reported by the accountant.
What if we missed a report or received a notice?
Start with the relevant period, filing history, notice and transaction records. Different failures can have different consequences. Check the applicable provision, available responses and any relief before estimating exposure. No adviser can guarantee a penalty waiver or an assessment outcome.
How do you price the work?
Ask for a written scope covering the entities, years, transaction categories and deliverables. Confirm whether database access, accountant certification, filing and responses to notices are included. Fees depend on that scope and the quality of the available records.
Read the department’s transfer pricing reference for the 1961 Act framework alongside the current rules for your reporting period.
Plan the work around your Indian operation
Share the transaction types and reporting periods so we can define the next steps.
Discuss your transfer pricing scopeSetting up the entity first? See our foreign subsidiary service. For investment and remittance reporting, see FEMA compliance.