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india-transfer-pricing.md209 lines8.8 KB
v10India
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| 1 | --- |
| 2 | name: india-transfer-pricing |
| 3 | description: > |
| 4 | Use this skill whenever asked about India transfer pricing rules, documentation requirements, or CBDT transfer pricing compliance. Trigger on phrases like "transfer pricing India", "Indian TP documentation", "Form 3CEB", "master file India", "local file India", "CbCR India", "APA India", "Section 92", "safe harbour India", "specified domestic transactions", or any question about intercompany pricing for Indian entities. |
| 5 | version: 1.0 |
| 6 | jurisdiction: IN |
| 7 | category: transfer-pricing |
| 8 | depends_on: |
| 9 | - transfer-pricing-workflow-base |
| 10 | --- |
| 11 | |
| 12 | # India Transfer Pricing Skill v1.0 |
| 13 | |
| 14 | --- |
| 15 | |
| 16 | ## Section 1 -- Quick Reference |
| 17 | |
| 18 | | Field | Value | |
| 19 | |---|---| |
| 20 | | Country | India (Republic of India) | |
| 21 | | Tax authority | Central Board of Direct Taxes (CBDT); Transfer Pricing Officer (TPO) | |
| 22 | | Key TP legislation | Sections 92-92F, Income Tax Act, 1961; Rules 10A-10E, Income Tax Rules, 1962 | |
| 23 | | Documentation | Rule 10D (Local File); Rule 10DA (Master File); Section 286/Rule 10DB (CbCR) | |
| 24 | | Reporting | Section 92E / Form 3CEB (Accountant's Report) | |
| 25 | | OECD member? | No (but BEPS Inclusive Framework member) | |
| 26 | | BEPS signatory? | Yes (Inclusive Framework) | |
| 27 | | Currency | INR | |
| 28 | | Documentation language | English | |
| 29 | | Assessment Year (AY) basis | AY = FY + 1 (e.g., FY 2024-25 = AY 2025-26) | |
| 30 | | Skill version | 1.0 | |
| 31 | |
| 32 | --- |
| 33 | |
| 34 | ## Section 2 -- Documentation Requirements |
| 35 | |
| 36 | ### 2.1 Local File (Rule 10D Documentation) |
| 37 | |
| 38 | | Item | Detail | |
| 39 | |---|---| |
| 40 | | Required? | Yes, for all entities with international transactions > INR 1 crore; or SDT > INR 20 crore | |
| 41 | | Format | Per Rule 10D: description of transactions, FAR analysis, method selection, comparables, financial data | |
| 42 | | Timing | Contemporaneous; maintained by income tax return due date | |
| 43 | | Retention | 8 years from end of relevant AY | |
| 44 | |
| 45 | ### 2.2 Master File (Form 3CEAA) |
| 46 | |
| 47 | | Item | Detail | |
| 48 | |---|---| |
| 49 | | Required? | Yes, if: (a) consolidated group revenue > INR 500 crore AND (b) aggregate international transactions > INR 50 crore OR intangible transactions > INR 10 crore | |
| 50 | | Filing deadline | 30 November of AY (same as ITR due date for TP cases) | |
| 51 | | Content | Part A: group information, entity details; Part B: detailed master file per OECD standards | |
| 52 | |
| 53 | ### 2.3 Accountant's Report (Form 3CEB) |
| 54 | |
| 55 | | Item | Detail | |
| 56 | |---|---| |
| 57 | | Required? | Yes, for ALL entities with international transactions or specified domestic transactions (SDT) | |
| 58 | | Filed by | Independent Chartered Accountant | |
| 59 | | Deadline | 31 October of AY | |
| 60 | | Content | Certification that TP documentation maintained; details of each transaction, method, arm's length price | |
| 61 | |
| 62 | ### 2.4 Country-by-Country Report (Form 3CEAD) |
| 63 | |
| 64 | | Item | Detail | |
| 65 | |---|---| |
| 66 | | Threshold | Consolidated group revenue > INR 6,400 crore (≈ EUR 750 million) | |
| 67 | | Filing deadline | 12 months after end of reporting accounting year of UPE | |
| 68 | | Notification | Form 3CEAC (identifying reporting entity): due 2 months before CbCR deadline | |
| 69 | | Content | Per OECD Annex III: jurisdiction-wise revenue, profit, tax, employees, assets | |
| 70 | |
| 71 | --- |
| 72 | |
| 73 | ## Section 3 -- Arm's Length Standard |
| 74 | |
| 75 | ### 3.1 Definition |
| 76 | |
| 77 | Section 92(1): Income from international transactions with associated enterprises shall be computed with regard to the arm's length price. Section 92B defines "international transaction" broadly. |
| 78 | |
| 79 | ### 3.2 Accepted Methods (Section 92C) |
| 80 | |
| 81 | | Method | Accepted | |
| 82 | |---|---| |
| 83 | | Comparable Uncontrolled Price (CUP) | Yes | |
| 84 | | Resale Price Method (RPM) | Yes | |
| 85 | | Cost Plus Method (CPM) | Yes | |
| 86 | | Transactional Net Margin Method (TNMM) | Yes | |
| 87 | | Profit Split Method (PSM) | Yes | |
| 88 | | "Other Method" (including DCF) | Yes (sixth method, any method yielding most reliable result) | |
| 89 | |
| 90 | ### 3.3 Most Appropriate Method |
| 91 | |
| 92 | Rule 10C: The most appropriate method considering the nature of transaction, functions/assets/risks, and availability of reliable data must be selected. |
| 93 | |
| 94 | ### 3.4 Range Concept |
| 95 | |
| 96 | For datasets with 6+ comparable data points: arm's length range is the 35th to 65th percentile. For fewer than 6: arithmetic mean applies. |
| 97 | |
| 98 | --- |
| 99 | |
| 100 | ## Section 4 -- Filing Obligations |
| 101 | |
| 102 | | Obligation | Detail | |
| 103 | |---|---| |
| 104 | | Form 3CEB (Accountant's Report) | Annual electronic filing; 31 October | |
| 105 | | Local File (Rule 10D) | Maintain; provide within 30 days of request | |
| 106 | | Master File (Form 3CEAA) | Annual electronic filing; 30 November | |
| 107 | | CbCR notification (Form 3CEAC) | Annual; 2 months before CbCR deadline | |
| 108 | | CbCR (Form 3CEAD) | Annual; 12 months after UPE's year-end | |
| 109 | | Income Tax Return | 30 November (for TP cases) | |
| 110 | |
| 111 | --- |
| 112 | |
| 113 | ## Section 5 -- Deadlines |
| 114 | |
| 115 | | Item | Deadline | |
| 116 | |---|---| |
| 117 | | Form 3CEB filing | 31 October of AY | |
| 118 | | Income Tax Return (TP cases) | 30 November of AY | |
| 119 | | Local File maintenance | By ITR due date (30 November) | |
| 120 | | Provision on TPO request | Within 30 days | |
| 121 | | Master File (Form 3CEAA) | 30 November of AY | |
| 122 | | CbCR notification (Form 3CEAC) | 2 months before CbCR due date | |
| 123 | | CbCR (Form 3CEAD) | 12 months after end of UPE's reporting year | |
| 124 | |
| 125 | --- |
| 126 | |
| 127 | ## Section 6 -- Penalties |
| 128 | |
| 129 | | Offence | Section | Penalty | |
| 130 | |---|---|---| |
| 131 | | Failure to furnish Form 3CEB | 271BA | INR 1,00,000 (INR 1 lakh) | |
| 132 | | Failure to maintain/furnish TP documentation | 271G | 2% of value of each international/SDT transaction | |
| 133 | | Failure to report or incorrect reporting | 271AA(1) | 2% of value of each transaction | |
| 134 | | Failure to furnish Master File | 271AA(2) | INR 5,00,000 (INR 5 lakh) | |
| 135 | | Failure to furnish CbCR (Form 3CEAD) | 286(6) | INR 5,000/day (up to 1 month); INR 15,000/day beyond 1 month; INR 50,000/day after penalty order | |
| 136 | | Inaccurate CbCR | 286(7) | INR 5,00,000 | |
| 137 | | Under-reporting of income (TP adjustment) | 270A | 50% of tax on under-reported income; 200% if misreporting | |
| 138 | |
| 139 | --- |
| 140 | |
| 141 | ## Section 7 -- Advance Pricing Agreements (APA) |
| 142 | |
| 143 | | Item | Detail | |
| 144 | |---|---| |
| 145 | | Availability | Yes (active program since 2012) | |
| 146 | | Types | Unilateral, Bilateral, Multilateral | |
| 147 | | Governing legislation | Section 92CC-92CD ITA; Rule 10F-10T | |
| 148 | | Application | To CBDT; Form 3CED with prescribed fee | |
| 149 | | Fees | INR 10 lakh (unilateral); INR 20 lakh (bilateral/multilateral) | |
| 150 | | Duration | 5 years prospective | |
| 151 | | Rollback | Available for 4 prior AYs (subject to conditions) | |
| 152 | | Processing time | Unilateral: 12-18 months; Bilateral: 24-48 months | |
| 153 | | Annual compliance report | Required (Form 3CEF) | |
| 154 | | Safe Harbour interaction | Separate from APA program | |
| 155 | |
| 156 | --- |
| 157 | |
| 158 | ## Section 8 -- Safe Harbours |
| 159 | |
| 160 | India has formal Safe Harbour Rules (Rule 10TD-10TG): |
| 161 | |
| 162 | | Transaction Type | Safe Harbour Margin/Rate | |
| 163 | |---|---| |
| 164 | | IT/ITeS services (turnover ≤ INR 200 crore) | Operating profit/operating cost ≥ 17% (to AE) or 17% (non-AE) | |
| 165 | | IT/ITeS services (turnover > INR 200 crore) | Operating profit/operating cost ≥ 18% | |
| 166 | | KPO services (turnover ≤ INR 200 crore) | Operating profit/operating cost ≥ 18% | |
| 167 | | KPO services (turnover > INR 200 crore) | Operating profit/operating cost ≥ 18% | |
| 168 | | Contract R&D (wholly/partly) | Operating profit/operating cost ≥ 24% | |
| 169 | | Manufacturing with insignificant risk | Operating profit/operating cost ≥ 12% | |
| 170 | | Intra-group loans (INR) | 1-year MCLR + 175 bps (capped at INR 100 crore) | |
| 171 | | Intra-group loans (Foreign currency) | 6-month SOFR + relevant spread | |
| 172 | | Corporate guarantee | 1% per annum (or 4% for associated enterprises with below investment grade) | |
| 173 | |
| 174 | Application via Form 3CEFA; election by ITR due date. |
| 175 | |
| 176 | --- |
| 177 | |
| 178 | ## Section 9 -- Recent Developments |
| 179 | |
| 180 | | Date | Development | |
| 181 | |---|---| |
| 182 | | 2025 | Income-tax Act, 2025 (new code) receives assent; TP framework carried forward | |
| 183 | | 2026 | Form 3CEB proposed to be replaced by Form 48 (data-rich, machine-readable format) | |
| 184 | | 2025-26 | New Income-tax Rules, 2026 introduce graded penalties for delayed accountant's reports | |
| 185 | | 2024 | Safe Harbour Rules updated thresholds and rates | |
| 186 | | 2024 | Continued high volume of APA completions | |
| 187 | | Ongoing | India actively participating in BEPS Pillar One/Two discussions | |
| 188 | | Ongoing | Block assessment scheme introduced from Tax Year 2026-27 | |
| 189 | | 2021 | CbCR threshold revised to INR 6,400 crore (from INR 5,500 crore) | |
| 190 | |
| 191 | --- |
| 192 | |
| 193 | ## Section 10 -- Interaction with Other Skills |
| 194 | |
| 195 | | Related skill | Interaction | |
| 196 | |---|---| |
| 197 | | india-corporate-tax | TP adjustments directly affect taxable income under ITA | |
| 198 | | india-gst | TP adjustments may affect valuation for GST on related-party transactions | |
| 199 | | india-bookkeeping | Indian accounting records (Ind-AS/Indian GAAP) support TP documentation | |
| 200 | | Specified Domestic Transactions | SDT rules (Section 92BA) apply TP provisions to certain domestic related-party transactions | |
| 201 | | Form 3CEB | Gateway filing; triggers TP audit jurisdiction | |
| 202 | | CbCR | Used by CBDT for risk-based audit selection and case referral to TPO | |
| 203 | |
| 204 | --- |
| 205 | |
| 206 | ## Disclaimer |
| 207 | |
| 208 | This skill and its outputs are provided for informational and computational purposes only and do not constitute tax, legal, or financial advice. Open Accountants and its contributors accept no liability for any errors, omissions, or outcomes arising from the use of this skill. All outputs must be reviewed and signed off by a qualified professional before filing or acting upon. |
| 209 |
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About
Use this skill whenever asked about India transfer pricing rules, documentation requirements, or CBDT transfer pricing compliance. Trigger on phrases like "transfer pricing India", "Indian TP documentation", "Form 3CEB", "master file India", "local file India", "CbCR India", "APA India", "Section 92", "safe harbour India", "specified domestic transactions", or any question about intercompany pricing for Indian entities.
INty-2025
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