Transfer pricing in India — s.92 and Form 3CEB: is this a do-it-yourself job?
Some of it, yes — and we will say so on the call if that is the honest answer. The parts that are worth paying for are the ones where a missed election, a missed deadline or an unverified threshold costs more than the fee: the report certifies the transactions, the method and the pricing, supported by prescribed documentation.
What if I have already filed and got it wrong?
That is a common starting point. We re-derive the position, identify whether an amendment or a disclosure route is the right vehicle, and tell you which one preserves the relief that is still available. The order matters more than the speed.
How long will it take?
It depends on the documents rather than on us. Once the pack is complete most filings turn around inside a fortnight; anything that needs a certificate from a tax authority runs on that authority's timetable, which we tell you at the start rather than at the end.
Do we need Form 3CEB if there was only one intercompany invoice?
Yes. India's requirement is not value-based, so a single international transaction with a related party creates the filing whether the amount is large or trivial. A recharge the group treats as an internal bookkeeping entry is still a transaction between enterprises. The report certifies what the transactions were, the method used and the pricing arrived at, supported by the prescribed documentation. Groups that assume a threshold exists usually discover otherwise through a default rather than a query, so the first step is listing every flow between the Indian company and the rest of the group.
Our Indian subsidiary only recharges costs, is that still reportable?
A cost recharge is a transaction between related enterprises and does not escape the report because no margin was taken. If anything it invites attention, because a bare pass-through is a pricing position that has to be justified like any other: why no margin, what the service was, who benefited from it, and what evidence shows it was delivered. We treat recharges the way the department does, as transactions needing a method, a rationale and documentation, and we test each flow on its own facts rather than accepting the group's internal label for it.
Can we use our group's global benchmarking study for India?
Use it as a starting point and expect to rework it. Indian benchmarking practice and the department's preferences on comparables differ from those applied elsewhere in the group, so a study built for another jurisdiction often supports the right conclusion with evidence an Indian assessment will not accept. The usual work is to keep the group's functional analysis and characterisation, then rebuild the comparable set and the screens on the basis Indian practice expects. That leaves one consistent story across the group, with local support that stands where it is filed.
Who signs Form 3CEB and what is the accountant actually certifying?
The report is an accountant's certification rather than a company declaration, which is why it carries weight and why it cannot be produced from a spreadsheet on the filing date. What is certified is that the international transactions with associated enterprises have been reported, that the method applied has been described, and that the pricing is supported by the documentation prescribed for it. The certification rests on that documentation existing, so the substantive work is the analysis behind the form. The form itself is where the analysis is presented.
What documentation do we need to support our transfer pricing in India?
Contemporaneous is the word that matters. The prescribed documentation is designed to show the position as it stood when the prices were set: what each entity did, what risks it bore, what assets it used, which method was chosen and why, and the comparable evidence relied on. Agreements should exist and should match what actually happens. The common failure is not missing documents but missing dates, because a study prepared when the notice lands describes a conclusion rather than a decision. We build the file for the year alongside the accounts.
The officer rejected our comparables, what happens next?
Rejection of a comparable set is ordinary rather than fatal, and the reply is technical. The work is to show why each rejected company passed the screens that were applied, to test the set the officer prefers against the Indian entity's own functions and risks, and to identify where a substitution changes the result and where it does not. Much of this ground is won or lost in the documentation prepared for the year, which is why the search process, the screens and the reason for each rejection are recorded at the time.
What is the CUP method?
Comparable uncontrolled price. You find the price charged in a comparable transaction between unrelated parties and test your intercompany price against it. It is the most direct of the methods and the most persuasive when it fits, because it compares like with like at the transaction level. Its limit is data: close comparables exist for commodities and standard products, rarely for bespoke services or unique intangibles, which is where the margin-based methods take over. See our transfer pricing work.
Do NRIs pay tax on money sent to India?
Sending your own funds to India is a transfer of capital, not income, so the remittance itself is not taxed. What is taxable is income the money then earns in India — interest, rent, capital gains — under the rules for the account type it sits in. Sending money out of India is the direction that needs certification before the bank will act. See NRE, NRO and FCNR accounts.
