Transfer Pricing for Indian Subsidiary Company
Arm's length pricing, documentation and Form 3CEB support for transactions between your Indian subsidiary and its foreign group companies.
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What is transfer pricing for an Indian subsidiary company?
Transfer pricing rules require transactions between an Indian company and its overseas associated enterprises, such as service fees, royalties, loans, goods and cost allocations, to be priced at arm's length. The company must benchmark the price using an accepted method, maintain documentation and have a chartered accountant certify Form 3CEB each year.
Why transfer pricing matters
Intercompany charges are scrutinised
Management fees, royalties and IT charges from the parent are common audit targets.
Documentation is mandatory
Prescribed records must be kept and Form 3CEB must be filed by the due date.
Penalties are real
Failure to maintain documentation can attract a penalty of up to 2% of the transaction value.
Group policy meets Indian law
The group's global policy has to be tested against Indian rules and benchmarks.
Scope of work
What we deliver
- Identification and mapping of all international and specified domestic transactions
- Functional analysis and method selection (CUP, RPM, CPM, TNMM, PSM or other)
- Economic benchmarking study using comparable company data
- Transfer pricing documentation and Form 3CEB preparation
- Intercompany agreements, invoices and policy alignment
- Support during assessments, DRP and appeals, and advance pricing agreement planning
Compliance at a glance
| Area | Requirement | Our approach |
|---|---|---|
| International transactions | Services, royalties, loans, purchases, sales, cost sharing | Mapped in a transaction register |
| Method | Most appropriate method under Indian rules | Selected after functional analysis |
| Documentation | Maintained contemporaneously | Local file prepared each year |
| Form 3CEB | Accountant's report with the tax return | Filed before the due date, normally one month before the return |
| Group reports | Master file and country-by-country report for large groups | Assessed against revenue thresholds |
Our process
Transaction mapping
List intercompany flows from ledgers and agreements.
Functional analysis
Record functions, assets and risks for each party.
Benchmarking
Select method and comparables, test the margin.
Documentation
Prepare the local file and Form 3CEB.
Defence and planning
Support assessments and plan intercompany agreements and APAs.
Frequently asked questions
Who needs to file Form 3CEB?
Any Indian company with international transactions or specified domestic transactions with associated enterprises must obtain and file Form 3CEB from a chartered accountant, regardless of the amount. Detailed documentation applies above a prescribed aggregate threshold.
How do management fees get tested?
We confirm the service was actually received, the benefit to the Indian entity and the cost base and mark-up, and benchmark the charge.
Can the group's global policy be used in India?
It can be a starting point, but it must be checked against Indian methods, comparables and documentation standards.
What if the assessing officer proposes an adjustment?
We prepare submissions, represent the company at assessment and dispute resolution stages and discuss secondary adjustment and repatriation consequences.
What is the threshold for transfer pricing documentation in India?
Detailed documentation under Rule 10D is generally required where the aggregate value of international transactions exceeds INR 1 crore, while Form 3CEB is required for any international transaction or specified domestic transaction regardless of value. Thresholds can change, so we confirm them each year.
When is the Form 3CEB due date?
The accountant's report in Form 3CEB is normally due by 31 October of the assessment year, one month before the due date of the return for transfer pricing cases. The date has been extended in some years, so we track the notified date.
What are the penalties for transfer pricing non-compliance?
The Income-tax Act provides penalties for failing to maintain documentation, failing to furnish the report and for adjustments made by the tax officer. Amounts depend on the default and the transaction value, so timely documentation is the best protection.
Do master file and country-by-country reporting apply to my group?
Master file (Form 3CEAA) and country-by-country reporting apply only to groups above prescribed consolidated revenue thresholds. We check whether your group is in scope and coordinate with your parent's global team.
Can you represent us in a transfer pricing assessment?
India BizSetup supports clients through audit queries with the documentation and benchmarking behind each position, and coordinates with appropriate tax counsel if a dispute needs formal representation.
This page gives general information as of publication and is not legal, tax or investment advice. Rules, thresholds and fees change — confirm current requirements with a qualified professional before acting.
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