Transfer Pricing Compliance Checklist for Indian Subsidiaries 2026

Editor's note (updated 27 Sep 2026). This post was first published on 4 May 2026. We have corrected or updated the following points.

1. Form 3CEB due date corrected. It is 31 October, one month before the 30 November return due date. It is not 30 November.
2. Documents on notice. Since 1 Apr 2023, TP documentation must be produced within 10 days of a notice, extendable by up to 30 days. The original said 30 days.
3. Master File. Part A of Form 3CEAA applies to every constituent entity of an international group. Part B applies only where group revenue exceeds ₹500 crore and the entity's international transactions exceed ₹50 crore (or intangibles transactions exceed ₹10 crore). The original implied a single ₹500 crore test.
4. The CbCR threshold has been ₹6,400 crore since 2021, not ₹5,500 crore.
5. Penalties restated. The "100–300%" range comes from the old s.271(1)(c). Current penalties are 50% / 200% under s.270A, plus the specific TP documentation penalties.
6. Income-tax Act 2025. From Tax Year 2026-27, TP provisions sit in Chapter X of the 2025 Act, and the accountant's report is Form 48 (s.172, Rule 85 of the 2026 Rules). For FY 2025-26 the 1961 Act, ss.92–92F and Form 3CEB still apply.

Transfer pricing is one of the most scrutinised areas of Indian tax. Dedicated Transfer Pricing Officers (TPOs) handle it, and India is consistently among the most active TP jurisdictions. This checklist covers what a foreign group's Indian subsidiary must do for FY 2025-26, which is filed in 2026, and what changes from Tax Year 2026-27.

Who must comply?

Any Indian company, or the Indian PE of a foreign entity, that has international transactions with associated enterprises (AEs) must comply. For FY 2025-26 the rules are ss.92–92F of the Income-tax Act 1961. From TY 2026-27 they are Chapter X of the 2025 Act.

Enterprises are associated where:

• one holds 26% or more of the voting power in the other, or a common party holds 26% or more in both, or
• there is common control or management, loan and guarantee dependence, or the other tests in the Act.

Specified domestic transactions above the threshold are also covered.

Annual TP compliance calendar

31 October: the accountant's report (Form 3CEB, from TY 2026-27 Form 48)

Every entity with international transactions must file a CA-certified report. It lists all AE transactions, the method used and the arm's-length conclusion. It is filed electronically, by the specified date one month before the return due date. For FY 2025-26 that is 31 October 2026. From TY 2026-27 the report is Form 48 under s.172 of the 2025 Act.

By 31 October (contemporaneous): the Local File or TP study

The TP study covers:

• the Indian entity and its functions, assets and risks
• the AE transactions
• the method chosen
• benchmarking, using databases such as Prowess, Capitaline or Orbis
• the arm's-length conclusion

It is not filed, but it must exist by the specified date. Since 1 April 2023 it must be produced within 10 days of a notice. The Assessing Officer or TPO can extend that by up to 30 days. Documents are kept for 8 years.

30 November: Master File (Form 3CEAA) and intimation (Form 3CEAB)

• Part A: every constituent entity of an international group.
• Part B: the full Master File, covering the group's business, value chain, intangibles, financing and financial position. It applies where consolidated group revenue for the year exceeds ₹500 crore and the entity's international transactions exceed ₹50 crore, or its intangibles-related transactions exceed ₹10 crore.
• Where several Indian entities qualify, one can be designated to file, using Form 3CEAB.

Country-by-Country Report: groups above ₹6,400 crore

Groups with consolidated revenue above ₹6,400 crore in the preceding year (aligned to the OECD's €750 million) must deal with CbCR:

• Form 3CEAC: notification of the reporting entity, by Indian constituent entities of foreign-parented groups.
• Form 3CEAD: the report itself, generally due within 12 months of the end of the reporting year. It is filed in India where the parent's jurisdiction does not exchange it.

Common related-party transactions

• Software development and ITES provided to the parent (usually cost-plus or TNMM).
• Management fees or shared-service charges from the parent. Benefit-test documentation is critical.
• Royalties and technology licence fees.
• Inter-company loans in either direction, and guarantees, including interest benchmarking and secondary-adjustment exposure.
• Purchase or sale of goods, and reimbursements.
• Secondments and payroll recharges. These are often overlooked, and they interact with the payroll cost base. Note the EPF ceiling rise to ₹25,000 from 17 Sep 2026.

TP methods

Six methods are recognised:

• Comparable Uncontrolled Price (CUP)
• Resale Price
• Cost Plus
• Profit Split
• TNMM, the most common for captive service providers, benchmarking the operating margin on cost against comparable companies
• "Other Method"

India uses a range (35th–65th percentile) where there are six or more comparables, and multiple-year data.

Certainty tools: safe harbour rules for specified transactions, Advance Pricing Agreements (unilateral or bilateral, with rollback), and from FY 2025-26 an option for block (multi-year) determination of arm's-length price for similar transactions.

What happens in a TP assessment?

1. Selection. Cases are chosen mainly by risk-based parameters.
2. Reference. The Assessing Officer refers the case to the TPO under s.92CA (1961 Act) or its 2025 Act equivalent.
3. Documents. The TPO asks for documentation, to be produced within 10 days, extendable.
4. Adjustment. Any adjustment is added to income and taxed at the corporate rate plus surcharge and cess. Secondary adjustment rules may require the excess to be repatriated or treated as a deemed advance.
5. Challenge. Disputes go to the Dispute Resolution Panel or CIT(A), and then to the ITAT. MAP is available under treaties.

Penalties (1961 Act references, carried into the 2025 Act)

Good contemporaneous documentation is also the main defence to penalty for under-reporting.

Is your India entity TP-compliant for FY 2025-26? Shardhan prepares transfer pricing documentation and accountant's reports for Indian subsidiaries across sectors. Contact our TP team.

General information, not legal advice. Last reviewed 27 Sep 2026.