Domestic Transfer Pricing –
Section 92BA, Specified Domestic Transactions, Arm's Length Price & Rule 10D Compliance
Domestic transfer pricing applies to specific related-party transactions within India — Specified Domestic Transactions under Section 92BA of the Income Tax Act. Where aggregate SDT value crosses ₹20 crore, tax holiday units, SEZ operators, and cooperative societies must meet the same arm's length price, Rule 10D documentation, and Form 3CEB obligations as international TP — with identical penalty exposure on default.
Overview
What Is Domestic Transfer Pricing in India?
Domestic transfer pricing extends transfer pricing principles to certain India-only related-party transactions. It targets transactions that can shift profits across tax-holiday units or related entities within a group structure — preventing artificial profit inflation in a tax-holiday unit at the cost of a taxable counterparty. The Finance Act 2012 introduced the regime from Assessment Year 2013-14, following the Supreme Court's observation in the Glaxo SmithKline case.
Section 92BA defines the Specified Domestic Transactions that attract the regime. The Finance Act 2017 narrowed the scope materially by removing Section 40A(2)(b) related-party payments — so today, domestic transfer pricing centres on tax holiday transfers, Section 10AA SEZ-related transactions, and specified cooperative society transactions. A ₹20 crore aggregate threshold (raised from ₹5 crore in 2015) keeps most smaller taxpayers outside the regime entirely.
N D Savla & Associates handles end-to-end domestic transfer pricing for Indian businesses and group companies — testing SDT applicability, preparing TP study reports, and filing Form 3CEB on time. Our service connects with our Transfer Pricing Laws, International Transfer Pricing, Transfer Pricing Study Report, and Transfer Pricing Documentation services.
Domestic TP at a Glance
Two Regimes, Shared Compliance
Domestic Transfer Pricing vs International Transfer Pricing
Domestic and international transfer pricing share the same arm's length principle, the same six Section 92C methods, and identical Rule 10D and Form 3CEB compliance once triggered. They differ sharply, however, on scope, threshold, and the transaction types each covers. Understanding the contrast helps taxpayers apply the right regime to each transaction category.
| Feature | Domestic Transfer Pricing | International Transfer Pricing |
|---|---|---|
| Transaction Scope | India-only related-party transactions | Cross-border transactions with Associated Enterprises |
| Statutory Basis | Section 92BA | Sections 92 to 92F |
| Threshold | ₹20 crore aggregate SDT value per year | No threshold — single rupee qualifies |
| Transaction Types | Tax holiday, SEZ, Chapter VI-A, cooperative society | Goods, services, intangibles, financing, capital |
| ALP Methods (Section 92C) | Same six methods | Same six methods |
| Rule 10D Documentation | Same 13 categories — once threshold crossed | Same 13 categories — always applicable |
| Form 3CEB | Same combined form | Same combined form |
| Master File / CbCR | Not applicable | Applicable above ₹500 Cr / ₹6,400 Cr thresholds |
Section 92BA Scope
What Are Specified Domestic Transactions?
Section 92BA lists the current Specified Domestic Transactions after the 2017 amendment that removed Section 40A(2)(b) related-party payments. Three broad categories now dominate practice — tax holiday transfers, SEZ and Chapter VI-A transactions, and specified cooperative society arrangements. Each triggers the full domestic TP regime once the ₹20 crore threshold is crossed.
Tax Holiday Transfers — Section 80IA(8) & 80IA(10)
Section 80IA(8) covers transfers between a tax holiday unit and any other business of the same taxpayer — requiring market value to prevent profit inflation in the tax-holiday unit. Section 80IA(10) deems excess profits from a related party as non-deductible. Extends to Sections 80IAB, 80IB, 80IC, 80ID, and 80IE. Every tax holiday claim triggers SDT review.
SEZ & Chapter VI-A — Section 10AA & 80A(6)
Section 92BA covers transactions affecting Chapter VI-A deductions — Section 80A(6) transfers between units must be at market value. Section 10AA covers transactions involving SEZ tax holiday units, which remain active for existing SEZ operators. SEZ-related SDTs often form the largest share of domestic TP files in practice, especially for multi-unit groups.
Cooperative Societies — Section 80P(2)(b)
Certain cooperative society transactions qualify as SDTs — Section 80P(2)(b) covers milk cooperatives selling to federations, for example. The law also captures transactions between a cooperative society and member-related parties. The scope continues to evolve with each Finance Act, so annual review against the current Section 92BA list is essential.
Threshold Mechanics & Compliance Chain
The ₹20 Crore Threshold & What Follows
Domestic transfer pricing applies only when aggregate SDT value crosses ₹20 crore in a financial year. The threshold is tested fresh every year, and crossing it triggers the full compliance chain — Rule 10D documentation, Form 3CEB certification, and exposure to TPO assessment under Section 92CA. The sequence from threshold test to full compliance runs on a strict annual cycle.
From ₹20 Crore Threshold Test to Full Compliance Chain
Aggregation — All SDTs Combined Per Taxpayer: The ₹20 crore test uses the aggregate value of every Specified Domestic Transaction — tax holiday transfers, SEZ transactions, cooperative society arrangements — summed per taxpayer, not per transaction or per counterparty. Both inbound and outbound transactions add to the aggregate. The test applies afresh every financial year.
Threshold Crossed — Full Compliance Triggered: Crossing ₹20 crore activates the full regime. Every Specified Domestic Transaction must match the arm's length price under Section 92C, using the same six methods as international TP. Our Benchmarking Analysis team delivers the Indian-comparable dataset underpinning each computation, with the tax-holiday unit or deduction-claiming entity typically chosen as the tested party.
Rule 10D Documentation — Same 13 Categories as International TP: Complete Transfer Pricing Documentation must be maintained contemporaneously — entity-level, industry-level, and transaction-level records across 13 prescribed categories. The Transfer Pricing Study Report forms the core, documenting functional analysis, comparable selection, and ALP computation. 8-year retention is mandatory.
Form 3CEB Certification — Combined Form for Domestic & International: A Chartered Accountant signs and files Form 3CEB by 31 October for every taxpayer with any Specified Domestic Transaction. Form 3CEB is a single combined form covering both domestic and international TP — so groups already filing for international transactions simply extend it to include SDTs. Non-filing attracts ₹1 lakh penalty under Section 271BA.
Penalties & Dispute Framework
Penalties, TPO Assessment & the DRP Route
Non-compliance with domestic transfer pricing attracts the same stiff penalties as international TP — Section 271AA, 271G, and 271BA apply identically. Disputes also follow the same appellate framework: TPO assessment under Section 92CA, draft assessment order, and the DRP or CIT(A) route thereafter. Every domestic TP taxpayer needs a clear strategy before the first TPO notice arrives.
Failure to Maintain Rule 10D Documentation — 2% of Transaction Value
Section 271AA imposes 2% of the value of each Specified Domestic Transaction where Rule 10D documentation is missing or contains incorrect information. Applies to both absence of records and to errors in the maintained file. On large tax-holiday or SEZ transactions, the penalty can run into crores — making complete annual documentation far cheaper than any remedial exercise.
Failure to Furnish Information on TPO Request — 2% of Transaction Value
Section 271G imposes another 2% where the taxpayer fails to furnish information or documents requested by the Transfer Pricing Officer during assessment. Often triggered where documentation exists on paper but cannot be produced in time — making systematic retention as important as initial preparation. The two 2% penalties under 271AA and 271G can apply simultaneously to the same transaction.
Non-Filing of Form 3CEB — ₹1 Lakh Flat Penalty
Section 271BA imposes a flat ₹1 lakh penalty for non-filing or late filing of Form 3CEB. Applies even when the underlying SDTs are genuinely at arm's length price — the procedural obligation is separate from substantive compliance. Since Form 3CEB is a single combined form covering both domestic and international transactions, one missed filing can trigger the penalty across both regimes simultaneously.
TPO Assessment, DRP & ITAT Appeals — Same Framework as International
The AO refers domestic TP cases to the TPO under Section 92CA — our Transfer Pricing Assessment team handles every stage. TPO hearings often decide the outcome on tax-holiday and inter-unit transfer disputes. Where adjustments are proposed, the Transfer Pricing DRP route binds the AO within 9 months, and Transfer Pricing Appeals to ITAT remain available post-DRP.
Our Services
Our Domestic Transfer Pricing Services at N D Savla & Associates
End-to-end domestic transfer pricing services — Section 92BA applicability review, ₹20 crore threshold testing, Rule 10D documentation, TP study reports for tax-holiday and SEZ units, Form 3CEB certification, TPO assessment response, and DRP representation for Indian businesses, SEZ operators, cooperative societies, and multi-entity groups.
SDT Applicability Review & ₹20 Crore Threshold Testing
TP Study Report & Rule 10D Documentation for Tax Holiday Units
Form 3CEB Certification — Domestic & International Combined
TPO Assessment, DRP & ITAT Appeals for Domestic TP
Complete Domestic Transfer Pricing Services — Section 92BA, Form 3CEB, Rule 10D & TPO Response.
SDT applicability review, ₹20 crore threshold testing, Rule 10D documentation, TP study reports for tax-holiday units and SEZ operators, Form 3CEB certification, TPO assessment response, DRP representation, and ITAT appeals — for Indian businesses, SEZ operators, cooperative societies, and multi-entity groups.
+91 98190 00511 | +91 91670 58000 | +91 98190 00445 | nainitsavla@savlagroup.in
Contact UsF.A.Q.
Domestic transfer pricing extends transfer pricing principles to certain related-party transactions within India. Specifically, it covers Specified Domestic Transactions under Section 92BA of the Income Tax Act. Additionally, it applies when the aggregate SDT value crosses ₹20 crore in a financial year. Furthermore, it focuses on tax holiday units and deduction-claiming entities. Therefore, domestic transfer pricing prevents artificial profit shifting within Indian group structures.
Section 92BA lists the current Specified Domestic Transactions. Specifically, these cover Section 80IA(8) and 80IA(10) tax holiday transfers. Additionally, they include Section 10AA SEZ-related transactions. Furthermore, certain cooperative society transactions under Section 80P also qualify. Moreover, Section 40A(2)(b) related-party payments were removed from SDTs by the Finance Act 2017.
Domestic transfer pricing applies when aggregate Specified Domestic Transactions cross ₹20 crore in a financial year. Specifically, the Finance Act 2015 raised the threshold from ₹5 crore. Additionally, the ₹20 crore test uses the total of all SDTs. Furthermore, the threshold applies per taxpayer — not per transaction or counterparty. Therefore, many smaller taxpayers fall outside domestic transfer pricing entirely.
Arm’s length price in domestic transfer pricing uses the same Section 92C methods as international TP. Specifically, these are CUP, RPM, CPM, PSM, TNMM, and the Other Method. Additionally, the taxpayer selects the most appropriate method based on the transaction nature. Furthermore, domestic TP benchmarking uses Indian comparable companies. Therefore, method selection and benchmarking run on identical principles across both regimes.
Rule 10D documentation for domestic transfer pricing mirrors the international TP requirements. Specifically, the same 13 categories apply once the ₹20 crore threshold is crossed. Additionally, the file must cover entity-level, industry-level, and transaction-level records. Furthermore, the documentation must be contemporaneous with the transactions. Moreover, retention for eight years is mandatory under the law.
Form 3CEB is the Chartered Accountant’s certificate on both international and Specified Domestic Transactions. Specifically, the same form covers both regimes together. Additionally, the due date is 31st October each year for audit cases. Furthermore, Form 3CEB certifies that every transaction matches the arm’s length price. Therefore, on-time Form 3CEB filing remains mandatory for every eligible domestic transfer pricing taxpayer.
Domestic transfer pricing non-compliance attracts the same penalties as international TP. Specifically, Section 271AA imposes 2% of transaction value for missing Rule 10D documentation. Additionally, Section 271G imposes another 2% for failure to furnish information on request. Moreover, Section 271BA charges ₹1 lakh for non-filing of Form 3CEB. Furthermore, our Transfer Pricing Appeals team handles every dispute end-to-end.
