Hot Topics – Transfer Pricing in India

Companies with Indian operations are generally required to prepare annual documentation, including a local report and a signed accountant’s statement (Form 3CEB). For larger groups, Master File tailored to India requirements and country-by-country reporting obligations may also apply in line with India’s adoption of the OECD’s three-tiered documentation framework.

India applies a relatively strict and formal approach to transfer pricing, and there has always been a great emphasis by the Indian tax authorities on how intra-group transactions are priced, benchmarked and documented. This includes services, royalties, management fees, and financial arrangements. 

While Indian tax authorities appreciate OECD guidelines, they are also known for having detailed audits leading to multiple year tax adjustments. The authorities expect consistency and transparency in documentation and benchmarking – and may review compliance closely as part of tax audits.

Another important consideration is how India handles dispute resolution. While Mutual Agreement Procedures (MAPs) are available under double tax treaties, Indian authorities often encourage companies to enter into Advance Pricing Agreements (APAs) including bilateral APAs. The number of bilateral APA closures with the Danish authorities is amongst the top 5, from an Indian standpoint.

To help companies better navigate the Indian TP environment, Deloitte Denmark is hosting a webinar with specialist from Deloitte India. During the session, Bhavik Timbadia and Ankit Goel, both of them Partners from Deloitte India, will provide an overview of the local TP regime, practical guidance on documentation and risk mitigation, and insights into topical audit issues. They will also cover select cases of APAs which has lead tax certainty for unique and complex intra-group transactions. 

The session will conclude with a Q&A, where you will have the opportunity to raise specific questions about transfer pricing matters in India.