The complete applicability of Transfer Pricing Study Reports in India. Understand when TP documentation is mandatory, thresholds, penalties for non-compliance, and how CA experts can help ensure accurate transfer pricing reporting under Section 92D.
If your business deals with international transactions or related-party domestic transactions, then Transfer Pricing regulations under the Income Tax Act, 1961 apply to you. In today’s global business environment, it’s common for Indian entities to transact with group companies or subsidiaries abroad. However, the Income Tax Department wants to ensure that these transactions happen at a fair market value, also known as the Arm’s Length Price (ALP).
To prove this, businesses must prepare a Transfer Pricing Study Report (TPSR). This document, backed by proper transfer pricing documentation, justifies that prices applied to transactions between associated enterprises comply with Section 92D read with Rule 10D of the Income Tax Rules.
In this comprehensive guide, we’ll explain:
Let’s break it down step by step.
A Transfer Pricing Study Report (TPSR) is an analytical document that explains how a taxpayer has determined the arm’s length price for its international or specified domestic transactions. It’s a mandatory requirement under Section 92D of the Income Tax Act, supported by Rule 10D of the Income Tax Rules.
The report ensures that income arising from international transactions or specified domestic transactions is taxed fairly in India, preventing profit shifting or under-reporting.
In essence, it acts as a taxpayer’s defense document during a Transfer Pricing assessment or litigation.
The Transfer Pricing regulations in India were introduced by the Finance Act, 2001 and came into effect from Assessment Year 2002-03. These are contained in Sections 92 to 92F of the Income Tax Act and Rules 10A to 10E of the Income Tax Rules, 1962.
Here’s what these provisions establish:
The Central Board of Direct Taxes (CBDT) issues detailed guidelines for transfer pricing compliance in India. These rules apply to all taxpayers engaged in transactions between associated enterprises, whether within or outside India.
The Transfer Pricing Officer (TPO), appointed under the Act, can review your transactions and make transfer pricing adjustments if prices deviate from the prescribed arm’s length standard.
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The Transfer Pricing Study Report must be maintained by every taxpayer who has entered into:
These are cross-border dealings between related parties, such as:
Domestic transactions between related parties that influence taxable income in India, including inter-unit dealings under the same ownership.
As defined under Section 92A, an AE is a company that directly or indirectly participates in the management, control, or capital of another enterprise. For instance, a foreign parent and its Indian subsidiary are AEs.
Even international transactions below the prescribed threshold of INR 10 million are not relieved from maintaining documentation. The transfer pricing regulations are applicable irrespective of the transaction size.
A comprehensive TP Study Report usually contains:
The price that is applied to transactions between associated enterprises must demonstrate compliance with arm’s length principles.
Rule 10D lists the prescribed documents that must be maintained for every relevant tax year by taxpayers having aggregate international transactions or specified domestic transactions.
These documents must be maintained for a period of eight years from the end of the relevant tax year and produced when requested by the tax authorities.
Failure to report or maintain the prescribed documentation can lead to penalties and adjustments.
Read More: A Guide To Transfer Pricing Documentation Requirements In India
Every taxpayer covered under Section 92E must obtain an independent accountant’s report in Form 3CEB and file it electronically before the due date of the tax return (usually 31 October of the assessment year).
Form 3CEB is certified by a chartered accountant and contains:
While the Transfer Pricing Study Report supports the information in Form 3CEB, it is not filed online. It must be kept ready for submission during Transfer Pricing audits or assessments.
To determine the Arm’s Length Price (ALP), one or more of the following methods are applied:
Choosing the most appropriate method depends on the transaction type, comparability, and available data. A professional accountant can guide you in selecting and justifying the method in the TP Study Report.
Ignoring transfer pricing compliance obligations can attract severe penalties under the Income Tax Act.
Even a small delay or omission can trigger transfer pricing adjustments and increased tax liabilities.
Timely preparation of the Transfer Pricing Study Report provides multiple benefits:
Taxpayers who file their tax returns with complete TP documentation often avoid unnecessary scrutiny and maintain smoother relations with income tax authorities.
Many taxpayers make avoidable errors such as:
Such mistakes can lead to transfer pricing adjustments, penalties, and even prolonged tax disputes.
A professional CA firm in Gurgoan brings experience, accuracy, and strategic insight to the entire process.
At DSRV India, our team of chartered accountants in Gurgaon specializes in preparing comprehensive Transfer Pricing Study Reports that withstand departmental scrutiny.
The Transfer Pricing Study Report is more than a statutory formality it’s a safeguard for your business under the Income Tax Act, 1961. Whether you’re an Indian subsidiary of a multinational group or a domestic entity with related-party dealings, maintaining a detailed TP Study Report is essential to demonstrate compliance and prevent disputes.
With increasing scrutiny by tax authorities, timely preparation, accurate benchmarking, and expert review have become critical.
At DSRV India, we assist taxpayers in preparing and defending their Transfer Pricing documentation, ensuring complete compliance with the Indian Transfer Pricing Regulations and CBDT guidelines.
Every taxpayer engaged in international transactions or specified domestic transactions as per Section 92D must maintain it.
No. Transfer pricing regulations are applicable even if the transaction value is below INR 10 million.
Before the due date of filing the income tax return (generally 31 October).
No. It must be completed before filing the return and maintained for eight years.
The taxpayer may face penalties under Sections 271AA, 271BA, or 271G and possible TP adjustments.
Contact our experts today for a customized, audit-ready report that keeps your business compliant and confident.
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