# Transfer Pricing Study & Documentation

> Indian entities with international transactions with associated enterprises — or specified domestic transactions above ₹20 crore — must price them at arm's length and keep contemporaneous documentation. A transfer pricing study analyses functions, assets and risks, selects the most appropriate method (often TNMM for services), benchmarks against comparable companies from databases, and documents the result. Documentation must be kept when transactions exceed ₹1 crore a year.

Practice: Transfer Pricing — https://www.industax.com/services/transfer-pricing/

Typical cases are Indian subsidiaries providing IT or support services to foreign parents on a cost-plus basis, distributors buying from group companies, intra-group loans and guarantees, royalties and management fees.

We prepare the study before the year-end where possible, so pricing can be trued up within the year rather than adjusted under audit.

## Key facts

| Item | Detail |
| --- | --- |
| Covers | International transactions; specified domestic transactions above ₹20 crore |
| Documentation | Required if transactions exceed ₹1 crore |
| Common method | TNMM; also CUP, cost plus, resale price, profit split |
| Report | Form 48 (formerly 3CEB) by an accountant |

## Who needs this

- Indian subsidiaries of foreign groups
- Indian companies with overseas subsidiaries
- Groups with large domestic related-party dealings

## What's included

- FAR analysis
- Method selection and benchmarking
- TP documentation
- Year-end true-up advice

## Documents

- Intercompany agreements
- Segmental financials
- Group structure and transfer pricing policy

## Process

1. **Analyse** — Functions, assets and risks mapped.
2. **Benchmark** — Comparables searched and filtered.
3. **Document** — Report finalised before filing.

## FAQs

### What mark-up is acceptable for IT services to a parent?

It depends on benchmarking of comparable companies each year; there is no fixed rate. Safe harbour rules offer prescribed margins for eligible taxpayers who opt in.

### Is TP documentation needed if transactions are small?

The detailed documentation requirement applies once international transactions exceed ₹1 crore in the year, but the arm's length requirement and Form 48 apply regardless.

### What happens if pricing isn't at arm's length?

The Transfer Pricing Officer can make an adjustment, increasing taxable income, with interest and possible penalties.

## Official sources

- Income Tax Department — Transfer Pricing: https://www.incometaxindia.gov.in/

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Canonical page: https://www.industax.com/services/transfer-pricing/tp-study-documentation
Publisher: Indus Tax — CA-led tax and compliance firm (https://www.industax.com). Contact: info@industax.com, 9059139258.
This is general information, not advice for your specific facts.