Transfer Pricing
Transfer Pricing – Classic Partners LLP
Classic Partner – Chartered Accountants for International Tax & Transfer Pricing
What is Transfer Pricing?
Transfer Pricing (TP) refers to the pricing of international transactions between associated enterprises (AEs), such as parent companies, subsidiaries, branches, or related parties.
Since such transactions are not always conducted at market prices, the Indian Income-tax Act, 1961 (Sections 92 to 92F) and OECD Guidelines require them to be carried out at Arm’s Length Price (ALP).
Transfer Pricing regulations are designed to:
Prevent profit shifting and tax evasion
Ensure fair taxation of cross-border transactions
Maintain compliance with global and domestic tax authorities
Applicability of Transfer Pricing in India
Transfer Pricing regulations apply to:
International transactions with associated enterprises (purchase/sale of goods, services, royalty, interest, management fees, etc.)
Specified Domestic Transactions exceeding ₹20 crore in a financial year (e.g., transactions between related parties covered under domestic law).
Key Transfer Pricing Requirements
Maintenance of TP Documentation (Rule 10D)
Functional, Asset & Risk (FAR) analysis
Industry and economic analysis
Comparable analysis & benchmarking study
Justification of Arm’s Length Price
Transfer Pricing Audit Report (Form 3CEB)
Mandatory certification by a Chartered Accountant
To be filed along with the income tax return
Methods for Determining ALP (Rule 10B)
Comparable Uncontrolled Price (CUP) Method
Resale Price Method
Cost Plus Method
Profit Split Method
Transactional Net Margin Method (TNMM)
Any other method prescribed
Common Transactions Requiring TP Compliance
Import/export of goods and raw materials
Intra-group services (IT, accounting, HR, marketing)
Royalty payments and technical know-how fees
Interest on inter-company loans
Cost-sharing arrangements within a group
Business restructuring or intangibles transfer
Penalties for Non-Compliance
Non-adherence to Transfer Pricing regulations can result in:
Adjustment to income by tax authorities (leading to higher tax liability)
Penalty for not maintaining documentation: 2% of value of each transaction
Penalty for not furnishing Form 3CEB: ₹1,00,000
Risk of litigation and double taxation
Benefits of Transfer Pricing Compliance
Minimizes risk of tax disputes and penalties
Provides transparency in cross-border dealings
Builds credibility with tax authorities in India & abroad
Facilitates smoother tax assessments
Ensures alignment with OECD and BEPS (Base Erosion & Profit Shifting) guidelines
Why Classic Partner?
Our Transfer Pricing specialists assist clients in:
Preparing robust TP documentation as per Indian law
Filing Form 3CEB and related compliances
Benchmarking analysis using global databases
Advisory on cross-border structuring & tax efficiency
Representation before tax authorities & tribunals in case of disputes
End-to-end advisory on Advance Pricing Agreements (APA) & MAP (Mutual Agreement Procedures)
Looking for expert Transfer Pricing consultants in India?
Classic Partner – Your trusted Chartered Accountants for International Taxation & Transfer Pricing Advisory.
