Transfer Pricing Laws

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Transfer Pricing Laws in India – N.D. Savla & Associates

With increasing globalization, many Indian companies and Non-Resident Indians (NRIs) with cross-border businesses engage in international transactions with their associated enterprises. To ensure these transactions are conducted at arm’s length and profits are not shifted to low-tax jurisdictions, India has a robust transfer pricing law framework under the Income-tax Act, 1961. At N.D. Savla & Associates, we provide expert transfer pricing advisory, documentation, and compliance services to help businesses meet Indian regulatory standards and avoid tax disputes.

Overview

Transfer pricing laws apply to international transactions between associated enterprises (AEs) and specified domestic transactions. Companies must demonstrate that the prices charged in cross-border dealings are comparable to those that would be charged between unrelated parties under market conditions. Non-compliance may result in heavy penalties and tax adjustments.

Features

  • Transfer Pricing Study Reports (TPSR): Preparation of mandatory documentation to justify arm’s length pricing

  • Benchmarking Analysis: Identifying appropriate comparables for international transactions

  • Advisory on inter-company pricing policies for goods, services, royalties, loans, and guarantees

  • Advance Pricing Agreements (APAs): Support in filing and negotiating with CBDT to provide certainty for future transactions

  • Master File and Country-by-Country Reporting (CbCR): Documentation for multinational enterprises under BEPS guidelines

  • Representation before tax authorities during Transfer Pricing Assessments and Litigation

  • Advisory for NRIs and foreign subsidiaries on structuring transactions under FEMA and Income-tax rules

Documents Required

  • Inter-company agreements and contracts

  • Audited financial statements of Indian and overseas entities

  • Details of international transactions (sales, services, royalties, loans, guarantees)

  • Transfer pricing study reports of group companies (if available)

  • Functional, Asset, and Risk (FAR) analysis documentation

  • Invoices and transaction records with associated enterprises

  • Benchmarking analysis reports

Procedure

  • Transaction Review – Identify international and specified domestic transactions.

  • Functional Analysis – Study functions performed, assets used, and risks assumed (FAR).

  • Benchmarking – Select appropriate method (CUP, RPM, CPM, TNMM, or Profit Split) to test arm’s length pricing.

  • Documentation – Prepare Transfer Pricing Study Report (TPSR) with supporting data.

  • Compliance Filing – File Form 3CEB certified by a Chartered Accountant.

  • Advisory & Defence – Represent before authorities in case of transfer pricing audit or litigation.

  • Ongoing Support – Update benchmarking annually and assist in APA/CbCR compliance.

Why This Matters

Failure to comply with transfer pricing laws in India can result in 100% to 300% penalties of the tax underpaid, in addition to litigation costs and reputational risks. With N.D. Savla & Associates, your transfer pricing transactions are documented and defended with precision, ensuring compliance, tax optimization, and peace of mind in global operations.