Every transaction between related entities across borders has to be priced the way unrelated parties would have priced it, and proving that on paper is most of what transfer pricing compliance actually involves.
Sections 92 to 92F of the Income Tax Act require international transactions, and specified domestic transactions above ₹20 crore, between associated enterprises to be computed at Arm’s Length Price. India recognises six methods for arriving at that price, Comparable Uncontrolled Price, Resale Price, Cost Plus, Profit Split, Transactional Net Margin, and a residual Other Method, with no fixed hierarchy between them. Whichever one fits the transaction and the available data, backed by a functional analysis of what each party actually does, risks, and owns, is the one that applies. A fresh benchmarking search generally needs to be run every year rather than rolled forward from the last one.
Every company with international related-party transactions has to file Form 3CEB, an Accountant’s Report certified by a Chartered Accountant, regardless of transaction value, there’s no minimum threshold that exempts you. It’s due one month ahead of the income tax return deadline, which for transfer pricing cases falls on 30 November, putting the 3CEB filing itself around the end of October.
Beyond the 3CEB, India follows the three-tier documentation structure most countries use: a Local File once aggregate international transactions cross ₹1 crore, a Master File once your group’s consolidated revenue and transaction value both cross the prescribed thresholds, and a Country-by-Country Report for multinational groups with consolidated global revenue above roughly ₹6,400 crore. Smaller groups below these thresholds don’t need to prepare the Master File or CbCR, but the Local File and Form 3CEB still apply.
Two genuinely useful changes are worth knowing about. Starting from Assessment Year 2026-27, a multi-year block assessment option lets the Arm’s Length Price a Transfer Pricing Officer determines in one year carry forward automatically to similar transactions for the next two years, instead of re-litigating the same comparables analysis annually. You have to opt in for it, but it meaningfully cuts the yearly compliance grind once it’s in place. Separately, the Safe Harbour Rules were revised in March 2026, consolidating IT services, ITeS, KPO, and contract R\&D categories under rationalised margins and extending validity to five consecutive years for IT service transactions, up from the annual refiling that used to be required.
If a case does go to a Transfer Pricing Officer, either an Advance Pricing Agreement or the Safe Harbour route can head off future disputes before they start, an APA locks in methodology for several years ahead, while Safe Harbour accepts a prescribed margin without detailed scrutiny in exchange for giving up the right to invoke Mutual Agreement Procedure on that same transaction. Getting the documentation right the first time matters more here than in most areas of tax compliance: penalties for missing or inadequate transfer pricing documentation are calculated as a percentage of the transaction value itself, not a flat fee, which is exactly why the underlying paperwork gets treated so seriously.
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TP governs the pricing of goods, services, technology, loans, and IP between related enterprises. Under Sections 92–92F of the Income Tax Act, all such transactions must be at arm’s length price.
All companies with international transactions with associated enterprises. Form 3CEB is mandatory when international transactions exceed ₹1 crore, or domestic transactions exceed ₹20 crore. Groups above INR 5,500 crore consolidated revenue also need CbCR.
A CA-certified TP audit report documenting all intercompany transactions and the methods used for arm’s length pricing. Due by October 31 of the assessment year. Non-filing attracts a 2% penalty on transaction value.
Under BEPS Action 13, large MNC groups must file a Master File (Form 3CEAA) and a Country-by-Country Report (Form 3CEAD) disclosing jurisdiction-wise revenue, profits, taxes paid, and headcount.
A TPO may propose adjustments if intercompany prices deviate from arm’s length — triggering tax demand plus penalties up to 200% of the tax amount. Camantra provides documentation, TPO responses, and litigation support before DRP/ITAT.