Transfer Pricing Compliance Checklist for Indian Subsidiaries — 2026
Transfer pricing is one of the most scrutinised areas of Indian tax law. The Income Tax Department has dedicated TP Assessment Officers, and India consistently features in global rankings of most aggressive TP enforcement jurisdictions. This checklist covers every compliance obligation for a foreign company's Indian subsidiary for FY 2025–26.
Who Needs Transfer Pricing Compliance in India?
Any Indian company (or Indian PE of a foreign entity) that has "international transactions" with "associated enterprises" (related parties) must comply with India's transfer pricing regulations under Sections 92 to 92F of the Income Tax Act, 1961. An "associated enterprise" includes any entity in which the Indian company holds 26% or more equity, or which holds 26% or more in the Indian company, or where there is common management or control.
The Annual TP Compliance Calendar
By 30 November (or extended deadline) — Form 3CEB
Every company with international transactions must file Form 3CEB — the Transfer Pricing Accountant's Report — signed and certified by a Chartered Accountant. This form summarises all international transactions during the year, the TP method applied for each, and the arm's length price determined. It is filed electronically on the Income Tax portal as part of the tax return.
By 30 November — Transfer Pricing Study (Local File)
The TP Study (Local File under BEPS Action 13 terminology) is a detailed document describing: the Indian entity, its related-party transactions, the TP methods applied, benchmarking analysis (using Prowess, Bloomberg, or Orbis databases), and the conclusion on arm's length pricing. This document does not need to be filed with the Tax Department but must be maintained and produced within 30 days of a TP Assessment notice.
Master File — for Groups with Consolidated Revenue above INR 500 crore
Indian entities that are part of a multinational group with consolidated group revenue exceeding INR 500 crore (approx. USD 60 million) must file Form 3CEAA (Master File) with the Income Tax Department. The Master File describes the group's global business, value chain, intangibles, and financial arrangements.
Country-by-Country Report (CBCR) — for Groups above INR 5,500 crore
Groups with consolidated annual revenue exceeding INR 5,500 crore (approx. USD 660 million) must file a Country-by-Country Report (Form 3CEAC/3CEAD). The CBCR covers revenue, profit, tax paid, employees, and assets in each country of operation.
Common Related-Party Transactions Requiring TP Documentation
- Software development services provided by Indian entity to overseas parent
- Management fees or shared services charges from overseas parent to India
- Technology licence or royalty payments from India to overseas IP-holding entity
- Inter-company loans (both directions)
- Back-office, KPO, or BPO services
- Purchase or sale of goods to/from related parties
- Guarantee fees for Indian entity's borrowings guaranteed by overseas parent
TP Methods Applicable in India
India's Income Tax Act recognises six TP methods (largely aligned with OECD guidelines): Comparable Uncontrolled Price (CUP), Resale Price Method (RPM), Cost Plus Method (CPM), Profit Split Method (PSM), Transactional Net Margin Method (TNMM), and the "Other Method" for unique transactions. TNMM (benchmarking the Indian entity's net margin against comparable independent companies) is the most commonly applied method for captive service providers in India.
What Happens in a TP Assessment?
Cases are selected for TP Assessment either through a risk-based screening algorithm or random selection. The Transfer Pricing Officer (TPO) issues a notice under Section 92CA. Companies typically have 30 days to produce all TP documentation. The TPO may propose adjustments if the documented arm's length price differs from the TPO's independent determination. Adjustments are added to the company's income and taxed at the applicable corporate tax rate plus surcharge and cess. Penalties for TP non-compliance range from 100% to 300% of tax on under-reported income.
Is your India entity TP-compliant for FY 2025–26?
Shardhan prepares comprehensive transfer pricing documentation for Indian subsidiaries across all sectors. Contact our TP team.