Transfer Pricing

Cross-border transactions between associated enterprises are governed by the transfer pricing provisions in Sections 92 to 92F of the Income Tax Act, 1961, read with Rules 10A to 10E of the Income Tax Rules, 1962.

Section 92 — Computation at arm's length price (ALP): Income from an "international transaction" between "associated enterprises" (as defined in Sections 92A and 92B) must be computed having regard to the ALP.

Section 92C / Rule 10B — Methods: The ALP is determined using one of the prescribed methods — Comparable Uncontrolled Price (CUP), Resale Price Method (RPM), Cost Plus Method (CPM), Profit Split Method (PSM), Transactional Net Margin Method (TNMM), or any other method prescribed under Rule 10AB — selected as the "most appropriate method" having regard to the nature of the transaction and availability of reliable data (Rule 10C).

Section 92E — Audit report: Every person who has entered into an international transaction (or a specified domestic transaction exceeding the prescribed threshold under Section 92BA) must obtain and furnish an accountant's report in FORM 3CEB before the specified date, certifying that the transactions have been conducted at arm's length and that prescribed documentation has been maintained.

Section 92D / Rule 10D — Documentation: Contemporaneous documentation of the international transactions and a comparability study must be maintained, subject to safe-harbour and Advance Pricing Agreement provisions under Sections 92CB and 92CC respectively, which provide certainty on the ALP for eligible transactions.

This service covers benchmarking, Form 3CEB certification, and documentation maintenance under Sections 92-92F and Rules 10A-10E.

Transfer pricing services cover the pricing of the international transactions between the associated enterprises under Sections 92 to 92F of the Income-tax Act 1961 — the arm's length pricing of the cross-border transactions, the selection of the method — the comparable uncontrolled price, the resale price, the cost plus, the profit split, the transactional net margin — the preparation of the transfer pricing documentation, the benchmarking study, the certificate in the Form 3CEB, and the defence at the assessments. The transfer pricing is the regime through which the Indian tax department tests the prices between the related entities.

The transfer pricing compliance is the annual discipline of the international transactions — the pricing documented at the arm's length, the methods selected and the benchmarks prepared, the Form 3CEB certified, and the positions defended when the department adjusts. The regime under Sections 92 to 92F applies to the international transactions between the associated enterprises, and its adjustments carry the tax and the interest.

The cost of an unmanaged transfer pricing position is the adjustment at the assessment: the price that the department finds not at arm's length, the documentation that was never prepared, and the adjustment with the interest that follows.

This service is for companies with international transactions. We map the international transactions under Section 92B, select the method and prepare the benchmarking under Sections 92C and 92D, build the transfer pricing documentation and the Form 3CEB, and defend the positions at the assessments and the appeals so the related-party pricing stands at the arm's length.