The Classic Partners LLP
Transfer Pricing Study
The TP study is the economic backbone of your transfer pricing position — functional analysis, method selection, and benchmarking compiled into a defensible report. We build studies that hold up before the TPO.
Commission Your TP StudyWhat is a Transfer Pricing Study?
A TP study is a structured report demonstrating that your related-party prices meet the arm's length standard. It is the substance behind the Rule 10D documentation and the Form 3CEB certification — and the first document the Transfer Pricing Officer reads in an assessment.
What a Robust Study Contains
- Group and industry overview — business model, value chain, and market conditions.
- FAR analysis — functions performed, assets employed, and risks assumed by each entity; this drives entity characterisation (e.g. contract manufacturer, limited-risk distributor, captive service provider).
- Transaction analysis — each international and specified domestic transaction described and aggregated appropriately.
- Method selection — the most appropriate of the six methods under Section 92C, with reasons for rejecting others.
- Benchmarking — comparable search and arm's length range — detailed in our benchmarking analysis.
- Conclusion — tested-party margins against the range, with adjustment computations where needed.
When You Need One
- Annually, to support Form 3CEB and Rule 10D files before the October deadline.
- Before launching new intercompany transactions — services agreements, royalty licences, loans, or guarantees.
- During business restructuring — supply-chain changes, IP migration, or entity conversions.
- Ahead of APA or safe harbour applications and in preparation for assessments.
Our Study Methodology
Management Interviews
FAR facts captured from operations, not assumed from ledgers.
Database Benchmarking
Search strategy and screening per benchmarking standards.
Economic Adjustments
Working capital and capacity adjustments where warranted.
Aligned Conclusions
Study, documentation, and 3CEB telling one consistent story.
Multi-Year Strategy
Leveraging the multi-year ALP option to stabilise positions.
Litigation Readiness
Built to defend in assessment and appeal.
Frequently Asked Questions
What is a transfer pricing study report?
A report containing the industry analysis, functional (FAR) analysis, method selection, and benchmarking that together demonstrate the arm's length nature of related-party transactions; it underpins Rule 10D documentation and Form 3CEB.
Is a TP study mandatory every year?
Documentation supporting the arm's length position must exist for every year of transactions; in practice the study is refreshed annually, with benchmarking updated for current-year comparables.
What is FAR analysis?
The analysis of Functions performed, Assets employed, and Risks assumed by each party to the transaction; it characterises the entities and determines the tested party, the method, and the comparables.
Which is the most commonly used TP method in India?
The Transactional Net Margin Method (TNMM), because net margins are more tolerant of product differences and Indian databases support reliable net-margin comparisons.
Can one study cover multiple years?
The Finance Act 2025 allows the ALP determined for one year to apply to similar transactions for the next two years on exercise of the option, but documentation must still be maintained and facts must remain comparable.
Need a study the TPO can't shake?
Commission a FAR-driven, database-backed TP study built for scrutiny, not just the shelf.
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