If your Indian company transacts with a related party abroad, transfer pricing rules require you to price it at arm's length, document it contemporaneously, and certify it annually. From Tax Year 2026-27, the Income-tax Act, 2025 has renumbered the entire framework and replaced Form 3CEB with Form 48 and Forms 3CEAA/3CEAD with Forms 56–60. TaxLegit runs benchmarking, documentation, certification, and audit defence as one engagement.
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What Is Transfer Pricing Compliance, and Who Does It Apply To?
Transfer pricing compliance is the annual obligation, under Sections 161–173 of the Income-tax Act, 2025, for Indian companies to price related-party transactions at arm's length, document the pricing contemporaneously, and certify it through a chartered accountant's report. It applies to every Indian entity with an "associated enterprise" abroad broadly, any entity where one side holds 26% or more voting power in the other or where a common person controls both (Section 162; formerly Section 92A).
Documentation becomes mandatory once aggregate international transactions cross ₹1 crore in a financial year. The local file must contain a group and entity overview, a full functional analysis (who performs functions, owns assets, bears risk), a multi-year economic benchmarking study, and comparability adjustments. Failing to maintain it carries a penalty of 2% of the transaction value under the corresponding penalty provision, regardless of whether the pricing itself was correct.
Master File and CbCR (BEPS Action 13)
Requirement
Threshold
Old Form → New Form
Master File
Group revenue > ₹500 crore AND Indian transactions > ₹50 crore (₹10 crore for intangibles)
3CEAA → Form 56
Designated-entity intimation
Filed 30 days before Master File due date
3CEAB → Form 57
CbCR notification (foreign parent)
Same group-revenue threshold as CbCR
3CEAC → Form 58
CbCR report
Consolidated group revenue > ₹6,400 crore (aligned to €750 million)
3CEAD → Form 59
Alternate reporting entity intimation
Where applicable
3CEAE → Form 60
How Does the New Safe Harbor Regime Work?
From Tax Year 2026-27, software development, IT-enabled services, KPO, and software contract R&D are consolidated into one "Information Technology Services" category with a uniform 15.5% operating margin on operating expenses, available where revenue from the foreign principal does not exceed ₹2,000 crore up from the earlier ₹200–300 crore band and the old 17–24% category-specific rates. Data center services join the regime for the first time, at a 15% cost-plus margin. Intra-group loans, corporate guarantees, low value-adding services, generic-pharma contract R&D, and auto-component exports remain eligible categories under the new Form 49, which merges the earlier Forms 3CEFA, 3CEFB, and 3CEFC into a single e-filing.
Once elected, IT-services Safe Harbor runs for 5 consecutive tax years, filed by 30 June of the first year, with automated acceptance and no TPO examination but it forfeits Mutual Agreement Procedure relief on the covered transactions, so it isn't automatically the right call for every filer.
How We Deliver Transfer Pricing Services
Structural Mapping
identify every associated enterprise and transaction type; review prior-year positions for inherited risk.
Policy and Eligibility Review
Check Safe Harbour and APA eligibility against the current thresholds.
Functional Analysis (FAR)
Short interviews with operational heads to define functions, assets, and risk.
The full local file, reconciled with the benchmarking study.
Certification and Filing
Form 48 (or Form 3CEB for AY 2026-27 filings), Form 49 where Safe Harbour applies, and Forms 56–60 where thresholds are crossed.
Audit and Dispute Support
Responses to TPO notices, representation before the Dispute Resolution Panel under Section 144C, and Mutual Agreement Procedure assistance.
Who We Work With
Indian subsidiaries of foreign parents needing annual certification and Master File compliance; Indian IT and BPO companies assessing the new 15.5% Safe Harbour or defending TNMM margins before a TPO; group parents above the CbCR threshold; and companies with intercompany royalties, management fees, or financing already under TP audit.
Secure your transfer pricing position
Whether you need this year’s Form 3CEB filed cleanly, a documentation file that will hold up to a TPO, or representation in a live audit, tell us your deadline, and we will pull the relevant database metrics before we speak.
The TaxLegit standard: confidential review, an annual compliance calendar, audit-ready documentation, and transparent fixed fees.
Form 3CEB continues to apply for FY 2025-26 (AY 2026-27) and earlier years. Form 48 applies from Tax Year 2026-27 onward both forms are in use during the current filing season, for different years.
A uniform 15.5% operating margin on operating expenses, replacing the earlier 17–24% category-specific rates, for revenue from the foreign principal up to ₹2,000 crore.
Form 3CEB is due by 31 October 2026; the income tax return, along with Master File and CbCR filings where applicable, is due 30 November 2026.
Broadly, an enterprise holding 26% or more voting power in another, or two enterprises under common 26%-or-more control, along with several deeming criteria for loans, guarantees, and shared management.
No, Eligibility conditions and supporting records must still be maintained; Safe Harbour removes TPO scrutiny on the covered transaction, not the underlying compliance obligation.
The TPO can substitute its own arm's-length price, triggering a tax adjustment and often a penalty; TaxLegit prepares the response, attends hearings, and can pursue Dispute Resolution Panel or Mutual Agreement Procedure relief.
