Written by Jayasri P · Last updated 29 August 2026 · Statutory references current to the Income-tax Act 2025 and the Income-tax Rules 2026.
For group policy, yes. For the Indian filing, a global transfer pricing adviser is not sufficient alone. The accountant’s report in Form 48 must be signed in India, and the local documentation under Section 171 and Rule 84 has to be built to Indian requirements. Most groups run both advisers together.
Looking for a transfer pricing consultant for an overseas parent company?
Appoint the parent’s global adviser for group policy and the Master File, and appoint an Indian firm for the statutory filing, the Local File and any assessment. That split is not a preference: the Indian obligations under the Income-tax Act 2025 attach to the Indian entity and are discharged in India.
The question usually arrives in a settled form. Group tax has a long relationship with a global network firm, that firm already services fifteen or twenty jurisdictions, and the Indian subsidiary is told to use it as well. What the instruction does not do is answer the four questions an Indian finance head has to answer to the Transfer Pricing Officer.
Who signs the accountant’s report for the Indian entity?
An accountant signs Form 48 in India, and the signature is a personal statutory act, not a firm-level output. Section 172 of the Income-tax Act 2025, read with Rule 85 of the Income-tax Rules 2026, requires every person who has entered into an international transaction to obtain a report from an accountant and furnish it by the due date. The Central Board of Direct Taxes has published guidance on Form 48, which replaced Form 3CEB.
A report produced outside India, however thorough, is not the accountant’s report for the purposes of Section 172, and someone in India still has to review the transactions, form an independent view on the method and the arm’s length price, and put a name to that view. We have set out the eligibility position in full in a separate article on who may certify the Indian accountant’s report.
When do groups discover this?
Usually in October.
The global adviser delivers a benchmarking study in September, an Indian firm is engaged three weeks before the due date, and that firm is then asked to certify work it did not perform and cannot fully see. Certification under time pressure on someone else’s analysis is where avoidable exposure enters an Indian file.
What does the Indian statute require that a global report does not cover?
Indian documentation is a defined list, not a general standard of reasonableness. Section 171 read with Rule 84 sets out the entity-level record that has to exist by the filing date, and the official navigator maps each new rule against the 1962 rule it replaces, with Rule 84 replacing Rule 10D.
A group transfer pricing report is usually built to a different specification. It documents the policy, the value chain and the group’s method selection. It does not necessarily contain the ownership structure of the Indian entity, the transaction-by-transaction functional analysis in Indian terms, the comparable set drawn from an Indian database, or the year-specific economic adjustments a Transfer Pricing Officer expects to see evidenced rather than asserted. Our note on what Indian transfer pricing documentation contains sets out the components.
Which Indian filings sit outside the global adviser’s usual scope?
Several of these are assumed to be covered when they are not.
| Obligation | Provision | Who normally prepares it |
|---|---|---|
| Local documentation | Section 171 with Rule 84 | Indian adviser, entity level |
| Accountant’s report, Form 48 | Section 172 with Rule 85 | Indian accountant, signed in India |
| Master File | Rule 123 | Group adviser, Indian filing by the entity |
| Country-by-Country report | Section 511 with Rule 124 | Parent, with Indian notification |
| Advance pricing agreement | Section 168 | Joint, Indian filing and negotiation |
The Master File and the country-by-country report are genuinely group deliverables, and the parent’s adviser is the right party to build them. The Local File and Form 48 are not.
Where does Indian practice diverge most from group method?
Comparable selection is the sharpest divergence. Indian benchmarking practice draws on Indian databases, applies turnover, related-party and persistent-loss filters that Indian appellate authorities have accepted or rejected over roughly two decades, and must defend the resulting set against a Transfer Pricing Officer running its own search. A global set built on regional data usually satisfies a group audit committee. It usually does not survive a reference under Section 166.
Does the parent’s adviser follow Indian rule changes closely enough?
Assume nothing here, and test it. India moved to the Income-tax Act 2025 and the Income-tax Rules 2026, renumbering the transfer pricing chapter and replacing Form 3CEB with Form 48. An adviser who serves India as one of many jurisdictions may still be working from the Section 92 series and the 1962 rule numbers.
Which mechanics does a group-level review miss?
Three carry consequences a group-level review does not reach. Secondary adjustment under Section 170 bites once a primary adjustment reaches ₹1 crore. It converts the excess into a deemed advance and runs interest until the money is repatriated, transforming the pricing issue into a treasury concern for the parent company. Penalty under Section 442 is computed at 2% of the value of the transaction for documentation and reporting defaults, so the exposure scales with the size of the related-party flow rather than sitting at a fixed sum. A reference under Section 166 then starts a separate process with its own timelines.
A group preparing an uncertain tax position must evaluate the Indian position on Indian facts, which we set out in our article on the FIN 48 exposure of an Indian subsidiary.
Whose interest does the adviser serve when the parent appoints and pays?
The adviser serves the party that engages it, and in a group mandate that party is the parent.
Transfer pricing allocates profit between two related parties. When the Indian entity is a captive service provider and group policy sets its cost-plus mark-up, two additional percentage points raise Indian taxable profit and reduce taxable profit in the parent’s jurisdiction by nearly the same amount, which is why the number is set at group level. An adviser reporting to group tax is asked to optimise the group position, while the Indian directors must be able to defend the Indian position as at arm’s length under Section 165. Those are not the same instruction.
Who carries the consequence if the Indian position fails?
The Indian entity does, and its officers do.
A penalty under Section 442 or Section 457 is levied on the Indian assessee, an adjustment raises Indian tax, Indian interest and an Indian appellate cost, and the parent’s adviser bears none of it under an engagement letter very likely signed in another country.
What does an independent Indian view actually change?
An independent Indian view changes what gets challenged before filing rather than after. An adviser reporting to the Indian board will say plainly when a group mark-up sits below the range Indian comparables support, when a service charge lacks the evidence of benefit an officer will demand, and when a policy that worked in twelve jurisdictions will draw an adjustment in this one.
How should the cost of the parent’s global transfer pricing adviser be recharged?
The recharge is an international transaction itself and must be charged at arm’s length. Where a parent engages a global adviser and recharges part of the fee to the Indian subsidiary, that charge falls under Section 163 as a service transaction between associated enterprises under Section 162, and is subject to the provisions under Section 165.
This creates a circularity worth naming. The fee for transfer pricing advice is itself a related-party charge that must be defended on transfer pricing principles, and a Transfer Pricing Officer who is unconvinced by an intra-group service charge does not make an exception for the professional fees.
What has to be demonstrable for the recharge to hold?
Four things, the same four that apply to any intra-group service charge.
| Test | What the Indian entity must be able to show |
|---|---|
| Benefit | The Indian entity received an identifiable service, not a shareholder activity, a distinction drawn in the OECD Guidelines rather than a numbered Indian provision |
| Need | The service was required and was not duplicated locally |
| Allocation | The key used is rational and consistently applied across entities |
| Mark-up | Any mark-up on cost is supported, or the charge is at cost with reason stated |
Shareholder activity is the trap. Work performed because the parent must satisfy its own group reporting, audit committee or home-country disclosure obligations is a cost of being a shareholder, and is not chargeable to the subsidiary at all, whatever allocation key is applied. A global report prepared principally for consolidated purposes sits close to that line, so the allocation basis has to be documented at the time rather than reconstructed later.
A charge recovering group overhead through the transfer pricing fee is a different transaction from a pass-through of the invoice of an external adviser, and the two must be identified separately in the intercompany agreement, because only the second is straightforwardly supported by a third-party invoice.
What governance model works for a subsidiary with a foreign parent?
A two-tier model works, and most well-run Indian subsidiaries of foreign groups arrive at it. The parent’s adviser owns group policy, the Master File and consistency of method, while an Indian firm owns the Local File, the Form 48 certification, the benchmarking search on Indian data and any proceedings before the Transfer Pricing Officer.
The two-tier model costs more than a single mandate, and less than an adjustment. It also survives a change of adviser at group level, because the Indian record stays in India with the firm that built it.
Steadfast Business Consulting (SBC) works in this position for Indian subsidiaries of overseas groups, alongside the group’s existing adviser rather than in place of it. SBC was named a Notable Transfer Pricing Firm 2024 by ITR World Tax, and the practice covers transfer pricing documentation, benchmarking and representation from Hyderabad, Mumbai, Pune and Dubai, including representation through the dispute stages.
What should the parent’s tax director settle before issuing the engagement letter?
Six points, settled in writing, remove most of the friction that appears later.
- Who signs Form 48, and whether that person has seen the underlying analysis
- Whether the Local File will be prepared contemporaneously or reconstructed after year end
- Which database the Indian comparable search will use
- Who instructs the adviser if the Indian and group positions differ
- How the global adviser’s fee is allocated to India, and on what basis
- Who appears before the Transfer Pricing Officer, and under whose engagement
None is a difficult question, and each becomes difficult once the year has closed.
If you are weighing this decision now, speak to our transfer pricing team about the split of responsibilities before the engagement letters are issued.
Frequently Asked Questions
Can the parent’s global adviser prepare the Indian Local File?
It can prepare the analysis, but the file must meet Section 171 and Rule 84 in Indian terms, including an Indian comparable search. Most groups have the Indian adviser build or review the Local File so the person certifying Form 48 has seen the work.
Who is allowed to sign Form 48 for an Indian subsidiary?
An accountant, signing in India. Certification is a personal statutory act under Section 172 and Rule 85, not a firm-level deliverable issued from another jurisdiction. Our separate article on the accountant’s report sets out eligibility in detail.
Is the fee charged by the parent’s adviser deductible in India?
It is deductible where the charge is a genuine intra-group service at an arm’s length price under Section 165, with benefit, need and a rational allocation key demonstrable. A charge reflecting shareholder activity for the parent’s own reporting is not chargeable at all.
Does using two advisers create inconsistency in the group position?
Not if policy sits with the group adviser and the Indian firm applies it to Indian facts. Inconsistency results from an unexamined single mandate more often than from a two-tier one, since the group method is never compared with Indian comparables until an officer does so.
What happens if the Indian and group transfer pricing views differ?
The Indian entity must file the position it can defend under Section 165, because the penalty under Section 442 and any adjustment fall on the Indian assessee. Escalate and resolve the difference before filing, which is why the instructing party must be agreed in the engagement letter.
Is an advance pricing agreement an alternative to this arrangement?
An advance pricing agreement under Section 168 fixes the method for future years and reduces dispute risk, but it removes neither the annual local documentation nor the Form 48 obligation. Pursue it jointly, with the group adviser on policy and an Indian firm on the negotiation.