Transfer Pricing Compliance in India for FY 2025–26
A practical checklist of applicability, documentation, forms and filing dates for AY 2026–27
The short answer
An Indian taxpayer that entered into an international transaction or a specified domestic transaction during FY 2025–26 must first identify the complete transaction population, test the pricing under the arm’s length principle, maintain the prescribed documentation where applicable and obtain Form 3CEB. For a taxpayer subject to transfer pricing, Form 3CEB is due one month before the return due date. On the ordinary statutory calendar for AY 2026–27, this means 31 October 2026 for Form 3CEB and 30 November 2026 for the income-tax return. Group-level Master File and Country-by-Country Reporting obligations must be evaluated separately.Form 3CEB
Which law applies to FY 2025 26
FY 2025–26 is governed by the Income-tax Act, 1961. This remains the position even though the return and related reports are filed after 1 April 2026. The Income Tax Department has expressly clarified that a return for income earned during FY 2025–26 relates to AY 2026–27 and continues under the 1961 Act. Accordingly, section 92E reporting continues through Form 3CEB for this year.Section 92E
Step 1 Identify every controlled transaction
Begin with a legal-entity and counterparty map. Match the associated enterprise definition against shareholding, control, management, financing, dependency and other relevant conditions. The ledger description alone is unreliable: a guarantee may carry no fee, a group service may sit in an expense account, and a deemed international transaction may appear to involve an unrelated counterparty.
Review tangible goods, services, royalties, licences, loans, guarantees, equity-linked funding, reimbursements, cost allocations and business restructuring.
Examine year-end balances, ageing and agreed credit periods for receivables and payables.
Identify free-of-cost support, use of group intangibles, employee secondments and transactions settled through another group company.
Evaluate specified domestic transactions separately. The aggregate threshold under section 92BA is INR 20 crore, but only the transactions covered by that provision enter the computation.
Step 2 Reconcile the books before benchmarking
Prepare a transaction-wise reconciliation from the general ledger to the related-party note in the financial statements, Form 3CD, invoices, agreements and the proposed Form 3CEB. Capture opening items reversed during the year, debit and credit notes, year-end true-ups, foreign-exchange differences and transactions booked under centralised vendor or employee codes. Differences should be explained in a working paper rather than left for the accountant to infer.
Step 3 Confirm the pricing actually followed
The intercompany agreement, invoices and financial results must tell the same story. Check the price or margin for each transaction against the agreed policy and the latest benchmarking. For a cost-plus arrangement, verify the cost base, exclusions, pass-through costs and allocation keys. For a distribution model, test the correct segment and ensure that non-operating items do not distort the margin.
Where a true-up or true-down is required, complete the analysis early enough to address accounting, GST, customs, withholding tax and foreign-exchange implications. A journal entry passed only to reach a target margin is weak evidence if the underlying invoice, agreement and business rationale remain inconsistent.
Step 4 Prepare reliable segmental results
Entity-level profitability may be unsuitable where the taxpayer undertakes different controlled transactions or also deals with independent parties. Direct revenue and costs should be identified first. Common costs should then be allocated using a key that reflects consumption or causation. The segmental statement must reconcile to the audited financial statements. Independent certification can strengthen the evidence where the segment is material and not reported in the audited accounts.
Step 5 Select and apply the most appropriate method
Method selection must follow the nature of the transaction, functional profile and reliability of available data. Database availability does not by itself make TNMM the correct method. Internal comparable transactions should be examined before external comparables, and adjustments should be made only where their effect on comparability can be reasonably quantified. Document the search date, filters, accept-reject reasons, financial computations and treatment of unusual items.
Step 6 Maintain the prescribed documentation
Section 92D read with Rule 10D prescribes the local transfer pricing documentation. The detailed Rule 10D requirement is subject to the applicable INR 1 crore threshold for international transactions, while the section 92E reporting obligation is broader. In other words, a taxpayer should not assume that Form 3CEB disappears merely because the transaction value is below INR 1 crore. The accountant’s report applies when an international transaction or covered specified domestic transaction exists.transfer pricing documentationRule 10DSection 92D
Group and business overview, ownership structure and associated enterprises
Description and terms of each controlled transaction
Functional, asset and risk analysis
Method selection and economic analysis
Agreements, invoices, ledgers, calculations and supporting evidence
Forecasts, budgets or market data relied upon for the pricing position
Step 7 Complete the applicable forms
| Compliance | Broad trigger | Ordinary due date | Key point |
|---|---|---|---|
| Form 3CEB | International transaction or specified domestic transaction | 31 October 2026 | No general monetary threshold for an international transaction |
| Income tax return | Taxpayer subject to transfer pricing | 30 November 2026 | Reconcile return disclosures with Form 3CEB |
| Form 3CEAA Part A | Constituent entity of an international group | 30 November 2026 | Part A applies even when Part B thresholds are not met |
| Form 3CEAA Part B | Consolidated group revenue above INR 500 crore plus transaction threshold | 30 November 2026 | International transactions above INR 50 crore or intangible transactions above INR 10 crore |
| Form 3CEAB | Multiple Indian constituent entities designating a filer | 30 days before Form 3CEAA | Confirm the designated Indian entity |
| CbCR forms | Section 286 conditions | Group-year based | Evaluate Form 3CEAC notification and Form 3CEAD separately |
Step 8 Run a final review before signing
Confirm that the associated enterprise list agrees across the group chart, ledgers, financial statements and Form 3CEB.
Tie each reported value to a ledger extract and retain the reconciliation.
Check the transaction description, method, arm’s length price and adjustment disclosure clause by clause.
Review loans, guarantees, receivables, reimbursements and transactions with nil or no separate consideration.
Confirm that agreements were valid during the year and reflect actual conduct.
Retain signed financials, reports, database output and management approvals in one controlled file.
The filing date is not the finish line
A well-prepared compliance file should also be usable during assessment. Keep the evidence that explains the result: allocation workings, benefit records, pricing approvals, segmental ledgers, comparable screening and explanations for losses or unusual movements. The strongest defence is usually the record created when the transaction occurred, not a narrative assembled after a notice.
Frequently asked questions
Is Form 3CEB required when international transactions are below INR 1 crore
Yes. The INR 1 crore threshold relates to the detailed Rule 10D documentation requirement. Form 3CEB under section 92E applies when the taxpayer has entered into an international transaction, subject to the law applicable to the facts.
What is the Form 3CEB due date for FY 2025 26
Under the ordinary statutory calendar, it is 31 October 2026, one month before the 30 November 2026 return due date for a transfer pricing case. Any later CBDT extension should be checked.
Can one entity level margin support all transactions
Not automatically. Separate transactions or classes of transactions may require separate testing unless aggregation is economically justified and the transactions are closely linked.
Does every Indian company need to file a Master File
No. Form 3CEAA applies to constituent entities of an international group, and Part B is subject to the prescribed group-revenue and transaction thresholds. Part A and Part B should be evaluated separately.
Disclaimer: This article is intended for general informational purposes and is not a substitute for professional advice. Applicability should be evaluated based on the specific facts and legal provisions relevant to each taxpayer.