A Practical Guide to Transfer Pricing Audit Support
Any Indian company that transacts with a related party outside India — a parent, subsidiary, or fellow group entity — falls within the transfer pricing provisions of the Income-tax Act 1961, whether the group is a Fortune 500 multinational or a two-entity India-UAE startup structure. Transfer pricing is not a niche compliance item reserved for large corporates; it is triggered the moment an Indian company invoices its overseas parent for services, pays a management fee to a group entity abroad, or receives an intercompany loan. PNPC Global has supported transfer pricing audits, benchmarking studies, and Form 3CEB certifications since 1986, with a dedicated India-UAE cross-border practice that understands both the Indian TP regulations and how they interact with your group's overseas related-party structure.
Understanding the Service
Transfer pricing (TP) audit support refers to the professional assistance a Chartered Accountant firm provides in complying with the transfer pricing provisions of Sections 92 to 92F of the Income-tax Act 1961, read with Rules 10A to 10E of the Income-tax Rules 1962. These provisions require that any 'international transaction' between 'associated enterprises' — as defined under Section 92A — be priced at 'arm's length', meaning the price that would have been charged between unrelated parties in comparable circumstances. This applies to a wide range of cross-border intercompany dealings: sale or purchase of goods, provision of services (management fees, technical support, marketing support), royalty and licence fee payments, intercompany loans and guarantees, cost allocation arrangements, and business restructuring transactions.
For the full scope, current process and what PNPC includes, see the dedicated Transfer Pricing Audit Support service page.
When You'd Need This
- Any Indian company or LLP that has entered into a transaction with an 'associated enterprise' outside India during the financial year — a foreign parent, subsidiary, fellow subsidiary, or an entity where common control or shareholding thresholds under Section 92A are met
- Indian subsidiaries of foreign multinationals providing captive services — software development, ITeS/BPO, engineering design, contract R&D — to their overseas parent or group entities, where the pricing of the intercompany service fee is the single most scrutinised TP issue in India
- Indian companies paying royalty, technical know-how fees, management fees, or brand fees to an overseas group entity — a category the Income Tax Department has historically examined closely for genuine commercial substance and arm's length pricing
- Companies with intercompany loans, guarantees, or trade credit extended to or received from an overseas associated enterprise, where the interest rate and guarantee commission need arm's length benchmarking
When It Isn't the Right Fit
- Not applicable to purely domestic companies with no cross-border related-party transactions — a wholly Indian-owned company transacting only with unrelated Indian third parties has no international transaction TP exposure under Sections 92 to 92F
- Not the same as a Companies Act statutory audit or an income-tax audit under Section 44AB — Form 3CEB is a distinct, separate accountant's certification specific to international and specified domestic transactions, filed in addition to (not instead of) the regular tax audit report and the statutory audit
- Specified domestic transaction (SDT) coverage is now narrow — after the Finance Act 2017 removed most Section 40A(2)(b) related-party payment transactions from Section 92BA, SDT applicability today is largely confined to specific categories such as transactions of an eligible SEZ/tax-holiday unit with a related unit — most ordinary domestic related-party dealings between two Indian entities are no longer within SDT scope
Common Questions
What exactly triggers transfer pricing compliance for an Indian company?
Any 'international transaction' — as defined under Section 92B — entered into with an 'associated enterprise' as defined under Section 92A triggers TP compliance. This covers sale or purchase of goods, provision or receipt of services, royalty and licence payments, loans and guarantees, cost allocations, and business restructuring, where the counterparty is outside India and meets the Section 92A relationship test (which includes shareholding thresholds, common control, and several other criteria beyond simple parent-subsidiary ownership). There is no minimum transaction value threshold for TP applicability itself, though Form 3CEB and Rule 10D documentation obligations do have prescribed thresholds for which parts of the form and study are mandatory.
What is Section 92A 'associated enterprise' status, and is it broader than shareholding?
Yes, significantly broader. Section 92A(1) establishes the basic test of participation in management, control, or capital. Section 92A(2) then lists thirteen specific deemed-AE scenarios, including: holding of 26% or more voting power (directly or indirectly), advancing a loan constituting 51% or more of the borrower's total assets, guaranteeing 10% or more of total borrowings, appointing more than half the board or one or more executive directors, complete dependence on know-how, patents, or other intangibles owned by another enterprise, or purchase of 90% or more of raw materials from, or sale of 90% or more of output to, another enterprise where prices are influenced by that enterprise. Two entities can be 'associated' under Section 92A(2) even with no direct shareholding relationship at all.
What is Form 3CEB and who needs to file it?
Form 3CEB is the accountant's report under Section 92E, filed by every person who has entered into an international transaction or a specified domestic transaction during the previous year. It must be furnished electronically, certified by a practising Chartered Accountant, and is due generally by 31 October of the assessment year for taxpayers with international transactions (the transfer-pricing-extended due date). The form discloses transaction-wise particulars across its annexures — nature of transaction, associated enterprise details, method applied, and value — and the CA certifies that proper information and documents have been kept as required under the Act and Rules.
Where PNPC Fits In
Speak directly with a PNPC Chartered Accountant about your transfer pricing exposure. Not a Form 3CEB filing service — a practising CA firm that builds defensible, contemporaneous TP documentation since 1986, and represents you through TPO scrutiny when it arrives, not just at the annual filing deadline.
PNPC Global has advised Chennai, Bangalore and Hyderabad businesses since 1986. Explore the full Audit & Assurance practice for related services, or go straight to the Transfer Pricing Audit Support page for specifics.
Rates, thresholds and filing dates are set by the relevant authority and revised periodically. Treat anything numeric here as "ask PNPC for the current figure," not as a quoted fact.