What Does Transfer Pricing Documentation Actually Include?

Written by Jayasri P · Last updated 20 August 2026 · Statutory references current to the Income-tax Act 2025 and the Income-tax Rules 2026.

Transfer pricing documentation is the Local File prescribed by section 171 of the Income-tax Act 2025 read with Rule 84 of the Income-tax Rules 2026. It runs to thirteen prescribed heads, must exist on the specified date, and has to be retained for nine years from the end of the tax year.

Most finance teams refer to the term “transfer pricing study report” to mean only the benchmarking analysis. This definition understates the obligation, because the benchmarking analysis is just one clause out of the thirteen the prescribed list requires, and that list also reaches ownership structure, group profile, functional analysis and the economic assumptions behind every price the group has set.

Who can prepare transfer pricing documentation for my company?

Anyone competent can prepare it, since the law does not require any qualifications for a preparer. Section 171 puts the responsibility to keep and maintain the information on the taxpayer. The taxpayer can create the file independently, hire an expert, or do both.

That freedom ends at the certification stage. The accountant’s report is a separate deliverable, and only a chartered accountant may sign it under section 172. Therefore, the majority of groups use a consultant who prepares the file, thus considering the transition from Form 3CEB to Form 48 only as one step of a lengthy process.

What is the transfer pricing documentation requirement in India?

Section 171 read with Rule 84. The Income-tax Act 2025 requires every person who has entered into an international transaction or a specified domestic transaction to keep and maintain prescribed information and document for a certain period and in a specified manner, with all three of those variables settled elsewhere. Rule 84 of the Income-tax Rules 2026 provides every one of them.

The old references have not survived: section 92D became section 171 and Rule 10D became Rule 84 from the tax year 2026-27. The content behind the thirteen heads remains the same for the most part, but the period of retention has been changed, and this remains the single point that is still incorrect in various internal compliance manuals.

Which persons must keep the file?

There are two categories, and the first is transactional: any person who has entered into an international transaction or a specified domestic transaction falls within section 171(1)(a). Any constituent entity of an international group falls within section 171(1)(b). Therefore, a company can carry a documentation obligation through group membership alone, without performing any reportable transaction, paying anything to an associated enterprise or receiving anything from one in the tax year.

Is there a value below which Rule 84 does not apply?

Yes, for international transactions only. Rule 84(2) of the Income-tax Rules 2026 specifies that the thirteen heads are of no effect where the aggregate value of international transactions recorded in the books for the tax year does not exceed ₹1 crore. The above provision appears to be clear until we read it alongside sub-rule (3).

Sub-rule (3) still requires the taxpayer to prove that income from those transactions was computed on an arm’s length basis. The exemption is only from the prescribed format and not from the burden of proof.

What does the Local File actually contain?

Thirteen information heads have been defined. They are classified as clauses (a) to (m) found in Rule 84(1). They fall into four practical groups, and the table below sets out what each group must show.

What supporting evidence has to sit behind the file?

Authentic documents, and Rule 84(5) names the categories. The list includes official publications and databases from the country of residence of the associated enterprise, market research studies, price publications including stock exchange and commodity quotations, published accounts, contracts that have been executed, and correspondence recording negotiated terms.

Two of those categories carry more weight than the rest. Inter-company agreements matching the activities described in the functional analysis, and correspondence proving that terms were negotiated rather than assumed, are what most often separate a file that survives examination from one that does not.

Does the file cover method selection as well?

Indeed, and it is clearly indicated in clause (i). The documentation must record the methods considered, the method selected as the most appropriate one and the reasons for that selection, so a file naming a method without explaining why the alternatives were rejected fulfils the arithmetic of the rule yet fails its purpose, and that is the first gap the officer looks into. Which transfer pricing method applies must be answered in the documentation, not outside it.

What does contemporaneous mean in practice?

It means the information must already exist on the specified date. According to Rule 84(6), the information and the documents must be contemporaneous as far as possible and must exist on the specified date given in section 173(d). The Act defines that date as one month before the due date for the return of income under section 263(1).

Thus, the due date comes sooner than most compliance calendars suggest. A file assembled during the week that precedes the return might have already missed the statutory date by almost one month, and the department is not obliged to prove that the analysis was reconstructed after the event when the dates in the working papers and the database extracts say so plainly.

Does a continuing transaction need fresh documentation every year?

Not automatically, no. Rule 84(7) provides that where a transaction continues to have effect beyond one tax year, fresh documentation need not be maintained separately for each year unless there is a significant change in the nature or terms of the transaction, in the underlying assumptions, or in any other factor affecting the transfer price; absent such a change, the existing file continues to serve.

In fact, the comparable set is updated annually in practice, for it is obvious that an analysis based on stale financial data creates the same problems as no analysis at all.

How long must the documentation be retained?

Nine years from the end of the relevant tax year. Rule 84(8) sets that period for the records and documents in sub-rules (1) to (4), one year more than the eight-year period of Rule 10D in the 1962 Rules.

The change has more significance than a mere additional year’s time indicates, because the retention policies constructed based on the previous rule will now begin the destruction of documents whose retention is still mandated by the law, and it is the underlying working papers and the comparable data that are subject to the requirements and not merely the final report itself, which means that just archiving the study does not discharge it.

Who prepares the documentation, and who certifies it?

The taxpayer or its adviser prepares it, a chartered accountant certifies the report that sits on top of the file, and it is important to keep these two functions separate. The certification under section 172 only relates to the particulars that are provided, while the sufficiency of the underlying file remains the risk of the taxpayer in any subsequent assessment.

What happens if the documentation is not maintained?

A penalty of two per cent of the value of each transaction. Section 442 of the Income-tax Act 2025 permits the Assessing Officer or the Commissioner (Appeals) to impose that penalty in case of any failure by a person to keep and maintain the requisite information, or where a transaction that should have been reported is not reported, or where incorrect information is supplied or retained.

At the same time, a different exposure exists in the form of section 171(2), which empowers the Assessing Officer or the Commissioner (Appeals) to seek information during the proceedings, and that information must then be produced within ten days of the notice, extendable by a further period of up to thirty days under section 171(3). A file existing only in raw working papers rarely becomes presentable within that time.

What does a Transfer Pricing Officer read first?

The functional analysis, and then the comparable set. An officer testing the arm’s length price under section 166 looks for the point where the file contradicts itself. The most reliable way to do that is to read clause (e) on functions, assets and risks in the light of clause (d) on terms.

Three weaknesses recur across transfer pricing assessments: the application of the same functional profile to various entities operating in different areas, a lack of documentation regarding the rejection criteria, and segmental financial information reconstructed after the notice is issued.

What should a documentation engagement deliver, and when?

A completed file before the specified date, with working papers retained in a condition that allows their reopening later. A transfer pricing documentation service is measured in the assessment that follows, usually two to four years after signature.

Steadfast Business Consulting (SBC) was recognised as a Notable Transfer Pricing Firm 2024 by ITR World Tax, and its team of Big 4 alumni holds access to the Indian and global comparable databases, including Prowess, CapitalineTP, AceTP, Amadeus, Orbis, RoyaltyRange and IBISWorld, alongside membership of the PrimeGlobal network. SBC provides transfer pricing documentation services covering the Local File, the Master File, Country-by-Country reporting, segmental profit and loss preparation and economic adjustments.

What are the stages of an engagement?

An engagement runs to a defined sequence: examination of the entity structure, comparison against Rule 84, the benchmarking and drafting work, and finally the accountant’s report. If you have not had your related-party positions examined since the renumbering, arrange a documentation gap review before the specified date.

Frequently Asked Questions

Is a transfer pricing study report the same as transfer pricing documentation?

No. The report describes the benchmarking analysis, which constitutes only a part of the documentation. Rule 84(1) prescribes thirteen heads covering ownership structure, group profile, business description, transaction terms, functional analysis, comparability, method selection, workings, assumptions and adjustments.

Is there a prescribed transfer pricing report format?

Although Rule 84 specifies the content, it does not specify a template and no format is provided for the Local File. Consequently, the file must address each of the thirteen heads in sub-rule (1) and be supported by the kinds of authentic document listed in sub-rule (5).

How long must transfer pricing documentation be kept?

Nine years from the end of the applicable tax year, under Rule 84(8) of the Income-tax Rules 2026. This replaced the earlier eight-year period under Rule 10D of the 1962 Rules, so retention schedules prepared under the old provisions would lead to premature destruction of files.

Do we need documentation if our international transactions are small?

Rule 84(2) eliminates the thirteen-head stipulation where the aggregate value of international transactions for the tax year does not exceed ₹1 crore. Rule 84(3) continues to demand that the taxpayer must show that income from these transactions is computed on an arm’s length basis.

Can our in-house finance team prepare the documentation?

Yes. Under section 171, the preparer is not required to have any qualifications, so a team from within the organisation can prepare the file. The requirements for certification do differ under section 172, as a chartered accountant is required, who cannot be the same person that maintained the records certified.

Does the documentation have to be filed with the department?

No. The Local File is kept and maintained, not filed. It becomes furnishable only under section 171(2) when the Assessing Officer or the Commissioner (Appeals) asks for it, and must then be produced within ten days of that notice.