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29/09/2026

Transfer Pricing Study Report in India: Benchmarking, Comparables & How the Arm’s-Length Range is Built

A Transfer Pricing (TP) Study Report in India under Section 92D read with Rule 10D is a report that documents the economic and functional analysis businesses conduct for compliance of international transactions between associated enterprises (AE) and specified domestic transactions (SDT) with the arm’s-length principle (ALP) under Indian transfer pricing rules.

While Form 3CEB serves as the annual statutory reporting in India, the real economic story of “why” and “how” lives inside the Transfer Pricing Study Report.

QUICK ANSWER

A Transfer Pricing Study Report in India documents how transactions with associated enterprises and SDT meet the arm’s-length principle. Detailed Rule 10D(1) documentation generally applies when international transactions exceed ₹1 crore. Form 3CEB for AY 2026-27 is due by 31 October 2026. The requested documents must be furnished within 10 days, extendable by up to 30 days to the department.

What’s in this TP Study blog?

This FY 2025-26 TP Study article explains:

What is a Transfer Pricing Study Report?
Is a Transfer Pricing Study Mandatory in India?
Transfer Pricing Study vs. Form 3CEB vs. Master File
Definitions of Tested Party, Profit Level Indicator, AE, ALP, MAM, Comparable Company & Tolerance Band
How a Transfer Pricing Study is Prepared: The Practical Process
What Should a Transfer Pricing Study Report Contain?
The ₹1 crore and ₹20 crore thresholds for TP Study
How long should transfer pricing local file be retained?
When should transfer pricing documentation be prepared?
What supporting records should a TP study rely on?
Which Transfer Pricing Method is Used to determine ALP?
Factors to select Comparable Companies or Transactions
How is the comparable-company search performed in India for TP compliance?
How is the arm’s-length range calculated in India?
How does the TP Study support Form 3CEB and the Income-Tax Return?
Common Mistakes in Transfer Pricing Benchmarking
Frequently Asked Questions on Transfer Pricing Studies

Key Takeaways

A Transfer Pricing Study Report is a report analysing international and specified domestic transactions to explain how their pricing matches ALP using functional analysis, benchmarking and ALP methods.
Rule 10D documentation applies when international transactions exceed ₹1 crore and SDT rules have a separate ₹20 crore threshold.
FAR analysis and the Most Appropriate Method (MAM) is important for transaction-level benchmarking.
Form 3CEB is a separate accountant’s report and does not replace the TP study.
Under Rule 10CA, the 35th-65th percentile range applies in CUP, RPM, CPM or TNMM cases with at least six comparables. Otherwise, the arithmetic mean is used for calculating ALP.

1. What is a transfer pricing study?

A transfer pricing study (local file) is a report on transaction-specific analysis and is used to document the process of determining and justifying the arm’s-length price for international transactions and SDT.

The ALP principle followed here is – would independent parties, dealing under comparable circumstances, would have agreed to a similar price, margin or commercial conditions?

A TP study connects four things:

The actual transaction and commercial arrangement.
The functions performed, assets used and risks assumed by the parties.
The method selected to test the transaction.
The comparable data and calculations supporting the conclusion.

India’s transfer pricing framework is described in Sections 92 to 92F of the Income-tax Act, 1961 for FY 2025-26 (Sections 161 to 173 of the Income-tax Act, 2025 from FY 2026-27 onwards) and Rules 10A to 10CA of the Income-tax Rules, 1962 (Rules 77to 89of the Income-tax Rules, 2026 from FY 2026-27 onwards).

Source: Section 92D of the Income-tax Act, 1961 read with Rule 10D of the Income-tax Rules, 1962

2. Is a Transfer Pricing Study Mandatory in India?

Section 92D of the Income-tax Act, 1961 and Rule 10D of the Income-tax Rules, 1962 tells us about information and documents that income tax assessees must maintain to support the determination of the arm’s-length price.

However, the income tax law does not prescribe a single report format with the name “transfer pricing study report”. Businesses in India, as a common practice, prepare a TP study to document their transaction analysis, functional profile, method selection, benchmarking and arm’s-length conclusion. There is a ₹1 crore threshold for maintaining documentation specified under Rule 10D(2).

3. Comparison Between Transfer Pricing Study Report (Local File) vs. Form 3CEB (Accountant’s Report) vs. Master File (Form 3CEAA)

Basis	Transfer Pricing Study Report(Local File)	Form 3CEB (Accountant’s Report)	Master File (Form 3CEAA)
Main Focus of Report	Supports the taxpayer’s use of ALP through transaction-specific economic and functional analysis	Accountant’s report on international transactions and SDTs.	Section 92D compliance by documenting group-level international transactions and supporting arm’s-length pricing and BEPS monitoring.
Legal Framework	Section 92D read with Rule 10D of Income-tax Rules, 1962.	Section 92E of Income-tax Act, 1961 read with Rule 10E.	Section 92D(1)(ii) and 92D(4) read with Section 286 and Rule 10DA
Applicability	Detailed documentation under Rule 10D(1) is required when aggregate value of international transactions exceeds ₹1 crore. TP law applicable on any SDT above ₹20 crore threshold.	Any international transaction irrespective of the transaction value threshold. TP law applicable on any SDT above ₹20 crore threshold.	Part A for every constituent entity of an international group; Part B only if group revenue is above ₹500 crore AND international transactions are above ₹50 crore (or intangibles above ₹10 crore)
What does it contain?	(FAR) Functional analysis, comparability search, filters and arm’s-length range computation.	Disclosures of AE names, transaction details, ALP methods used.	Global level information about the multinational group structure, in-depth details of constituent entities and all the transactions.
Filing or Completion Date	It is not filed itself but must maintain it and furnish it to the tax authorities within 10 days upon request, extendable by up to 30 days.	On or before 31 October of the AY (One month prior to ITR deadline)	On or before 30th November of the AY (Along with ITR)
Penalty on non-compliance	Failure to maintain prescribed TP documentation may attract a penalty of 2% of the value of each international or specified domestic transaction under Section 271AA.Also 2% per failure under Section 271G for failure to furnish documents required under Section 92D(3).	Failure to furnish Form 3CEB may attract a penalty of ₹1,00,000 under Section 271BA.	Failure to furnish the required Master File may attract a penalty of ₹5,00,000 under Section 271AA(2).

Most importantly, Form 3CEB does not replace the study or TP documentation. Equally, preparing a transfer pricing study does not by itself fulfil the compliance to furnish Form 3CEB.

Source: Income tax India-Form 3CEAA and Section 92D of the Income-tax Act, 1961

For the broader knowledge on Local File, Master File and Country-by-Country Reporting, read Transcending Borders with Transfer Pricing Documentation.

Transfer pricing documentation has three levels: Local File, Master File and Country-by-Country Reporting (CbCR). The Local File covers TP transactions related analysis, while the Master File provides an overview of the international group. CbCR reports the group’s income, taxes and economic activity across countries. Read our CbCR guide to dive deeper on this TP compliance.

4. Transfer Pricing Terms: Definitions

A. Tested Party: The party whose financial results are examined under the selected ALP method. Its selection depends on the transaction facts, the functions performed, the assets used, the risks assumed and the reliability of available data.

B. Profit Level Indicator (PLI): A financial ratio used to evaluate profitability under a profit-based method, such as TNMM. Examples include operating profit to sales and operating profit to operating costs.

C. Associated Enterprise (AE): An enterprise that meets the relationship tests prescribed under section 92A. The relationship may arise through participation in management, control or capital, 26% voting right test or through other conditions in the section.

D. Arm’s-Length Price (ALP): The price or profit margin that independent, unrelated companies would agree upon under similar commercial conditions in an open market.

E. FAR Analysis: An analysis of the functions performed, assets used and risks assumed by the parties to understand their economic roles in the transaction.

F. Most Appropriate Method (MAM): The ALP method [(TNMM, Comparable Uncontrolled Price (CUP) or CPM etc.] selected under Section 92C as the best fit for testing a specific transaction.

G. Comparable Company: An independent enterprise operating in similar economic conditions and business activities, used as a benchmark for assessing comparability with tested party.

H. Tolerance Band: The percentage notified by the Central Government under the second proviso to Section 92C(2), read with Rule 10CA(7), within which the actual transaction price may be deemed to be the arm’s-length price. It applies only where the range concept is not used and is not a separate arm’s-length range. The allowable variation is 1% for wholesale traders and 3% for others for AY 2026-27.

I. Wholesale trading: An international transaction or SDT involving trading in goods where (i) the purchase cost of finished goods is at least 80% of the total cost relating to those trading activities and (ii) the average monthly closing inventory of those goods is 10% or less of sales relating to those activities.

5. How is a Transfer Pricing Study Prepared in India: The Actual Process

Key Takeaway (Quick Summary of preparation of the TP study): The process of preparing a transfer pricing study starts with gathering financial data and conducting a FAR analysis to establish the economic profile of an intercompany transaction. Using commercial databases like Prowess IQ or Orbis, the TP advisor selects the most appropriate method, screens comparable companies and calculates an arm’s-length price for TP compliance.

A transfer pricing study report is prepared by examining the transaction, selecting an appropriate method, analysing comparable data and documenting how the arm’s-length result is determined by an assessee or by the help of an experienced transfer pricing consultant.

Collect and reconcile information: The TP advisor obtains and reviews the trial balance, financial statements, related-party transaction details, intercompany agreements, segmental financial data, invoices and relevant ledger entries. At first, the information is reconciled with the books to identify any issues.

Understand the business and perform FAR analysis: This establishes the economic profile of the transaction. The TP consultants conduct this step through management interviews using proper questionnaires, alongside a review of standard operating procedures (SOP). This determines the exact functions performed, assets used and risks managed by each party.

Define the transaction and select the method: The TP expert classifies the transaction type (such as IT services, royalty or goods sale), selects the tested party and chooses the most appropriate transfer pricing method (e.g., TNMM or Cost Plus). The PLI, like Operating Margin, is also finalized.

Identify and review comparable companies/transactions: Using commercial databases like Prowess IQ, Capitaline TP, Orbis or ACE TP, the TP professional searches for potential comparables. Search filters help narrow the results, but each shortlisted company is reviewed individually. The search approach and reasons for including or excluding candidates are documented.

Analyse financial results and adjustments: A database can provide information but the quality of the study depends on the analysis and judgment applied to it. The TP advisor compares multiple years financial metrics for the tested party and comparables. Where material differences appear, adjustments are made for comparability.

Determine the arm’s-length result: The TP consultant applies the selected method to the transaction and comparable data. The process involves applying range (such as the 35th to 65th percentile range) or the arithmetic mean.

Prepare and review the report: Bring together the transaction facts, FAR analysis, method rationale, search records, comparable data, calculations and conclusion. Reconcile the study with the accounts and Form 3CEB, explain any differences and retain the supporting evidence.

Source: Performing a Comparability Analysis in Chapter III (Paragraph 3.4) of the OECD Transfer Pricing Guidelines for Multinational Enterprises and Tax Administrations

Guidance Note on Report under Section 92E of the Income-tax Act, 1961

6. What Should a Transfer Pricing Study Report Contain?

Rule 10D(1) prescribes information that taxpayers must maintain. In the real practical world, a transfer pricing study report organises the TP information into a clear and reviewable structure.

Assesses can include these 13 sections in TP study:

Ownership Structure: Shareholding details and ownership interest in the assessee enterprise.
Group Profile: Names, addresses, legal status, tax residences and ownership linkages of all AEs involved in the transactions.
Business Description: Description of the assessee’s business, its industry and the business activities of transacting AEs.
Transaction Details: Nature, terms, quantum and values of international or specified domestic transactions.
FAR Analysis: Description of functions performed, assets employed and risks assumed by all transacting entities.
Financial Forecasts & Budgets: Economic analyses, forecasts, budgets or estimates impacting the transactions.
Uncontrolled Transactions Record: Nature, terms and conditions of the uncontrolled transactions used for comparability..
Comparability Analysis: Record of the analysis used to evaluate uncontrolled transactions against international transactions and SDTs.
Method Selection (MAM): Description of methods considered for ALP determination, justification for the MAM selection and how it was applied.
ALP Computations & Adjustments: Actual numerical workings, financial datasets used and adjustments made to account for differences.
Pricing Policies & Negotiations: Assumptions, policies and price negotiation records.
Tax Adjustments: Details of transfer pricing adjustments, if any to transfer prices and to the total income..
Supporting Data & Documents: Any additional information, data or documents pertaining to the transactions which may be relevant.

Source: Rule 10D of the Income-tax Rules, 1962

7. The ₹1 crore and ₹20 crore thresholds for TP Study

If your international transactions are worth ₹1 crore or less, you may not need to maintain the full set of documents listed in Rule 10D(1). But you must still be able to explain and support why the prices charged between related parties are at arm’s length if the tax department questions them. It is not a guarantee that the price will be accepted.

The ₹20 crore threshold is relevant to the applicability of transfer pricing provisions on transactions under specified domestic transactions (SDT) as per Section 92BA. Hence, we can conclude to maintain TP study for SDTs which are above ₹20 Crore.

Source: Sub-rule (2) of Rule 10D of the Income-tax Rules, 1962

8. How long should TP documentation in India be retained?

Rule 10D(5) mandates that transfer pricing information and documentation must be maintained for 8 years from the end of the relevant Assessment Year. For example, documentation for FY 2025-26 (AY 2026-27) must be preserved for eight years until at least 31st March 2035.

9. When should local file be prepared in India?

Under Rule 10D(4), transfer pricing information and documents should be contemporaneous and should exist by 31 October of the relevant assessment year, being one month before the applicable 30 November ITR due date for persons required to furnish a report under Section 92E. The ITR filing due date is 30 November, while the accountant’s report in Form 3CEB is due by 31 October.

10. What supporting records should a TP study rely on?

As per Sub-rule (3) Rule 10D of the Income-tax Rules, 1962, every TP analysis must rely on verifiable records, including audited annual reports, market research studies by reputed institutes, intercompany contracts with AE, agreements and contracts with unrelated enterprises, government publications, stock exchange feeds and governmental database extractions.

Know about Smart Transfer Pricing: Strategies for Business Growth.

Insider’s Insight

People ask us many times: Is a TP study, benchmarking study and transfer pricing documentation the same? A TP study explains the arm’s-length analysis, a benchmarking study focuses on comparing actual transactions with comparable data and TP documentation is the umbrella term that includes all sets of records supporting transfer pricing compliance.

11. Which Transfer Pricing Method is Used?

India’s transfer pricing rules prescribe 6 methods for determining the arm’s-length price. The method selected should be the one best suited to the facts and circumstances of the transaction and should provide the most reliable measure of the arm’s-length price.

The six prescribed methods are:

Comparable Uncontrolled Price Method (CUP)
Resale Price Method (RPM)
Cost Plus Method (CPM)
Profit Split Method (PSM)
Transactional Net Margin Method (TNMM)
Other Method (prescribed under Rule 10AB)

Source: Rule – 10B Determination of ALP

For a detailed explanation of each method, read our guide to when transfer pricing applies in India.

12. How are Comparable Companies or Transactions Selected?

Benchmarking compares a controlled transaction with sufficiently comparable uncontrolled transactions or parties. The purpose is to identify data that can reliably test the transaction.

Under Rule 10B(2), comparability is assessed by considering these factors:

Characteristics of the property or services: What is being transferred or provided?
Functions, assets and risks: What does each party do, what assets does it use and what risks does it assume?
Contractual terms: How are responsibilities, risks and benefits allocated?
Market and economic conditions: Where do the parties operate and what market, regulatory, competitive and cost conditions affect the transaction?

Source: Rule – 10B(2) Comparability of an international transaction or SDT

13. How is the comparable entity search performed in India for TP compliance?

A TP advisor can use databases such as Capitaline TP, Prowess IQ and ACE TP, etc. to identify potential Indian comparables. Annual reports, company websites and other public information can help verify the business activities and financial details of shortlisted companies. It involves judgement and careful examination.

The search can be performed as follows:

Search keywords and industry codes in the database to pull initial companies.
Filter out entities with huge related-party sales and keep only independent firms.
Remove companies with material differences.
Read annual reports and websites to verify actual business operations similarity.
Check AS 18/Ind AS 24 notes to get information about group dealings.
Match their functions, assets and risks directly against your tested party.
Finally, export the final list into an Excel matrix, documenting the exact reason for accepting or rejecting every single company.

Master Brains can help you with transfer pricing study preparation, benchmarking and review of existing TP studies. The scope, timeline and cost depend on the facts, complexity of the transaction and information available.

Searching for reliable cross-border tax and TP compliance support, learn more about our FEMA, FCRA and International tax consultancy (including transfer pricing).

14. How is the arm’s-length range calculated in India?

Under Rule 10CA, Indian assessees use a percentile range to determine the ALP.

When does the range mechanism apply for calculating ALP?

We cannot use the range concept for every situation. It only applies if:

The Right Method is Used: It is applicable to the TNMM, RPM, CUP and CPM.

The dataset must contain 6 or more similar independent companies or transactions.

How is the range determined in TP?

Find Comparables: Identify similar, unrelated companies or transactions using specific comparability filters.

Calculate Values: Calculate the profit margins or prices for these companies, using weighted averages for multiple years.

Sort in Ascending Order: Arrange these resulting values from the lowest to the highest.

Identify the Range: The arm’s-length range is strictly from the 35^th percentile to the 65^th percentile of your rearranged data.

Analysis of Your Actual Transaction with Range

If the actual price falls INSIDE the range (between 35^th and 65^th percentile), then the actual transaction is legally treated as an arm’s-length transaction. No tax adjustments are made.

If the price falls OUTSIDE the range, the actual transaction price is rejected. The ALP is taken as the median (50^th percentile) of the dataset and assessee must pay tax on the difference.

What if the Range is Not Applicable?

If we have fewer than 6 comparables or use methods where the range is not applicable, the range mechanism cannot be used. In those cases, we can simply use the Arithmetic Mean of all data points. A Tolerance range benefit is only allowed in the Arithmetic Mean concept.

The benefit is a 1% for wholesale trading and 3% for all other business types for AY 26-27. If the transaction price falls within this 1% or 3% margin of the average, it is accepted.

Source: Rule 10CA – Computation of arm’s length price in certain cases

Illustration: Arm’s-length range under Rule 10CA

Assume ABC India, the tested party, has entered into a controlled transaction to receive technical services from ABC Russia, its AE for ₹1 crore. The transaction is benchmarked using the Transactional Net Margin Method (TNMM) with the Profit Level Indicator (PLI) being Operating Profit to Operating Cost (OP/OC).

Step 1: After our comparable search, we found 8 comparable companies.

Step 2: We arranged them in ascending order as follows:

Comparable	Margin (OP/OC)
1	4%
2	6%
3	8%
4	10%
5	12%
6	14%
7	16%
8	18%

Step 3: Calculate the 35th and 65th percentiles for this dataset:

35th percentile: 8*0.35 = 2.8. Since the result is not a whole number, we will take the next higher place, that is, the 3rd value = 8%.
65th percentile: 8* 0.65 = 5.2. Take the next higher place which is the 6th value = 14%

Hence, the arm’s-length range is 8%-14%.

Case 1: Actual margin is outside the range

Suppose ABC India’s actual OP/OC margin is 7%,

Step 4: Compare actual margin with the range: 7% is outside the arm’s-length range of 8%-14%.

Step 5: Calculate the median: The ALP is determined using the median of 11% under Rule 10CA.

Step 6. Result: Calculate the transfer pricing adjustment.

Particulars	Amount
Actual operating margin	7%
Arm’s-length range	8%-14%
Median operating margin	11%
Actual operating profit (₹100 lakh × 7%)	₹7 lakh
Arm’s-length operating profit (₹100 lakh × 11%)	₹11 lakh
Transfer pricing adjustment	₹4 lakh

Case 2: Actual margin is inside the range

Suppose ABC India’s actual OP/OC margin is 10%,

Step 4: Compare actual margin with the range: 10% which falls inside the arm’s-length range of 8%-14%.

Step 5: Result: Since the actual margin is within the range, no adjustment is required under the range concept.

15. How does the TP Study support Form 3CEB and the Income-Tax Return?

A transfer pricing study supports the taxpayer’s analysis of ALP and helps organise the information needed for transfer pricing compliance – Form 3CEB and the Income-Tax Return (ITR).

For Form 3CEB, the report certified by a Chartered Accountant under Section 92E, the TP Study provides the transaction amounts for ALP, ALP method, benchmarking data and price conclusions that the accountant can verify and submit on the tax portal.

For Income-tax return, the study may support the taxpayer’s arm’s-length position, income computation and baseline for any TP adjustment. The final reporting treatment depends on the taxpayer’s facts and tax provisions.

TP Expert Tip

For FY 2025-26, businesses should plan the study early enough to support the TP reporting and return-filing.

For the accountant’s report and its reporting requirements, read Form 3CEB: Reporting Requirements and Compliance. (Link to be added here once this blog is published)

16. Common Weaknesses in Transfer Pricing Benchmarking

A benchmarking study may be difficult to defend where it:

Uses industry similarity as the only basis for selecting comparables.
Selects a method without proper documentation why it is appropriate.
Applies screening filters inconsistently.
Ignores material differences in functions, assets, risks or contractual terms.
Makes unsupported comparability adjustments.
Contains figures or transaction descriptions that do not reconcile with the accounts, Form 3CEB and ITR.
Uses a prior year’s study without reassessing changes in the business, transaction terms, market conditions.

Frequently asked questions on TP Study (Local File)

1. What is a transfer pricing study and is it legally mandatory under Rule 10D?

A Transfer Pricing Study Report documents how a business determines and supports the arm’s-length price of transactions with associated enterprises and SDT. It includes FAR analysis, benchmarking and comparable data. Rule 10D requires detailed documentation when international transactions exceed ₹1 crore. However, Form 3CEB is required regardless of this threshold.

2. TP study vs Form 3CEB vs Master File – what is the difference between the three?

A TP study supports the taxpayer’s transaction-specific arm’s-length analysis. Form 3CEB is the prescribed accountant’s report furnished under section 92E. The Master File contains prescribed group-level information and applies when the relevant statutory conditions are met. These documents serve different purposes and should not be treated as substitutes for one another.

3. How are comparable searched and screened (databases, quantitative and qualitative filters)?

Comparable companies or transactions for transfer pricing benchmarking in India are identified using databases such as Prowess IQ, Capitaline TP and ACE TP.Subsequently, the annual reports, and public filings are screened by analyzing functions, assets, risks (FAR) and related-party dealings to screen out unsuitable candidates.. The analysis should document everything including the search strategy, filters and reasons for including or excluding candidates.

4. What is the arm’s-length range (35th-65th percentile) and when does the median apply?

Under Rule 10CA, the arm’s-length range is determined when using TNMM, RPM, CUP or CPM as the Most Appropriate Method and a dataset of six or more entries. The range spans the 35th to 65th percentiles. If the actual price falls outside the applicable range, the ALP is taken as the dataset median in accordance with Rule 10CA.

5. How many years of comparable data must be used (the multiple-year data rule)?

Current-year data is required for transfer pricing benchmarking in general cases. For RPM, CPM and TNMM, tax rules allow preceding-year data when current-year data is unavailable at filing. Rule 10CA may also require weighted-average data across up to three years for eligible comparables.

1. Current-year data: Under Rule 10B(4) of the Income-tax Rules, 1962, you must use current-year data for comparison. Current year shall be the year in which your transaction took place.

2. Current-year comparable data: For RPM, CPM and TNMM only, Rule 10B(5)(i) requires comparables to be selected based on data relating to the current financial year.

3. Preceding-year data: If current-year data for a comparable is not available in public databases when filing your tax return, you can temporarily use data from the immediately preceding financial year, as per Rule 10B(5)(ii).

4. Data available later: If actual current-year data becomes available during assessment, the TPO must replace the preceding year’s figures with it, as per the proviso to Rule 10B(5).

5. Weighted-average data: According to the First Proviso to Rule 10CA(2) read with Rule 10CA(3), if a comparable uncontrolled transaction identified for the current year was also undertaken by comparable enterprise in one or both of the two preceding financial years, you must determine the price using the prescribed method and the weighted average of the relevant prices is included in the dataset, subject to the conditions of this rule.

6. Can Master Brains prepare or refresh a benchmarking study on a short timeline?

Yes, Master Brains can prepare a Transfer Pricing Study on a short timeline depending on transaction complexity, data availability and the quality of prior records. A report refresh is never just a year-end date edit. TP experts must recheck whether the business model, FAR profile, contract terms, market conditions or database comparables have shifted to ensure proper compliances..

7. What is the penalty for not maintaining transfer pricing documentation?

Failure to maintain prescribed transfer pricing information and documents may attract a penalty under Section 271AA(1) of the Income-tax Act, 1961. The penalty may be 2% of the value of each international transaction or specified domestic transaction.

Under Section 271AA(2), failure to furnish the information and the document as required under section 92D(4) will attract a penalty of five hundred thousand rupees.

If a person fails to furnish information or documents required by a notice under Section 92D(3), Section 271G may attract a penalty equal to 2% of the value of the relevant international transaction or specified domestic transaction for each failure. However, Section 273B may provide relief where the assessee proves reasonable cause.

Other transfer pricing penalties, such as those for documentation failures, are covered in our article Penalties for Transfer Pricing Non-Compliance- Transfer Pricing in India.

8. Is Form 3CEB required if international transactions are ₹1 crore or less?

Yes. Form 3CEB is required under Section 92E where a person has entered into an international transaction, regardless of whether its value is ₹1 crore or less. The ₹1 crore threshold under Rule 10D(2) is regarding detailed documentation requirements. It does not remove the Form 3CEB reporting or the requirement to justify the ALP.

9. What are the transfer pricing documentation and Form 3CEB due dates for FY 2025-26?

For FY 2025-26 (AY 2026-27), the various due dates date for maintaining transfer pricing documentation are:

Local File/Form 3CEB/Form 3CEAB – 31st October following the end of FY

Master File Part A & B filing (Form 3CEAA) – 30th November following the end of FY

The income-tax return due date for persons required to furnish a Section 92E report is 30 November 2026.

10. What is a benchmarking study in transfer pricing?

A transfer pricing benchmarking study compares the terms of a controlled transaction with comparable uncontrolled transactions to uphold the ALP principle. The study includes finding a correct benchmark, evaluating its comparability, selecting an appropriate pricing method and document every decision and finding to support TP compliance.

11. Is a Master File (Form 3CEAA) required for my business?

Part A of Form 3CEAA applies to every constituent entity of an international group. Part B applies when consolidated group revenue exceeds ₹500 crore and either aggregate international transactions exceed ₹50 crore or transactions involving intangible property exceed ₹10 crore as per Rule 10DA.

Let’s Build a Transfer Pricing Study That Can Support Your TP Compliance

Master Brains’ TP consultants have 10 plus years of experience in helping businesses prepare and review transfer pricing studies, transaction analysis and comparable selection, benchmarking and TP documentation,

Talk to Master Brains’ Transfer Pricing Experts About Your Transfer Pricing Study

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