Transfer pricing
01
Transfer Pricing Documentation & Local File
Substantiating your transactions with evidence. Section 92D mandates that every entity entering into international transactions exceeding ₹10 million must maintain "contemporaneous" documentation. We prepare a robust Local File that serves as your primary defense during an audit.
Functional Analysis (FAR): A deep-dive into the Functions performed, Assets employed, and Risks assumed by each entity.
Method Selection: Evaluating the “Most Appropriate Method” (TNMM, CUP, Resale Price, etc.) to justify your pricing.
Inter-company Agreements: Drafting legal contracts that reflect the economic reality of your transactions.
02
Benchmarking Analysis
The heart of the Arm’s Length Principle. A benchmarking study is a statistical comparison of your margins against independent industry peers. We utilize world-class databases (like Prowess, Capitaline, and Bloomberg) to find the most accurate comparables for your specific niche.
Search Strategy: Defining strict qualitative and quantitative filters to identify truly comparable companies.
Range Method: Utilizing the “Inter-quartile Range” (the 35th to 65th percentile) to ensure your margins stay within the safe zone.
Comparability Adjustments: Adjusting for differences in working capital, risk profiles, or market levels to ensure an “apples-to-apples” comparison.
03
Master File & CbC Reporting
Global transparency for the MNE group. For large multinationals, the Indian tax department requires a Master File (Form 3CEAA) to provide a high-level overview of the global business.
Master File Threshold: Mandatory if consolidated group revenue exceeds ₹500 crore and international transactions exceed ₹50 crore.
Country-by-Country Reporting (CbCR): Assisting with Form 3CEAD for groups with global revenue exceeding ₹6,400 crore, detailing profit and tax paid in every jurisdiction.
Consistency Check: Ensuring the story told in your Indian Local File matches the global Master File to prevent “red flags”.
04
APA & Safe Harbor Guidance
Buying "Tax Certainty" for the next 5 to 9 years. If you want to avoid annual audits, we help you enter into an Advance Pricing Agreement (APA) with the CBDT, which fixes your transfer price for up to 5 prospective years (with a 4-year rollback option).
Unilateral & Bilateral APAs: Negotiating agreements that are binding on the tax department, eliminating the risk of future litigation.
Safe Harbor Rules: Guiding mid-sized firms to opt for “Safe Harbor” rates (fixed margins accepted by the govt) to simplify compliance for routine services.
APA Annual Compliance: Managing the mandatory Annual Compliance Report (ACR) to keep your agreement active.
03
Reporting & Audit Compliance
Zero-error filing to prevent ₹1,00,000+ penalties. The ultimate step is the filing of Form 3CEB, the Accountant’s Report, which must be filed by October 31st every year.
Form 3CEB Certification: Independent audit and certification of all international and specified domestic transactions.
Secondary Adjustments: Assisting with the mandatory repatriation of “excess money” from overseas AEs within 90 days to avoid additional tax interest.
Audit Defense: Representing your case before the Transfer Pricing Officer (TPO) during a scrutiny assessment.