Transfer pricing
A Nashik manufacturer that buys from its parent abroad, or sells through its own overseas distributor, must prove each year that those prices are at arm's length; where proof is thin, an officer substitutes a price of their own. We prepare documentation, the accountant's report and benchmarking, and support assessments.
Last reviewed 1 October 2026
Transfer pricing applies when your business trades with a related party abroad, and in certain cases with a related party in India. The law requires those prices to match what independent parties would have agreed, and the proof takes the form of annual documentation and an accountant's report.
In a manufacturing group the difficulty lies in the transactions nobody treats as sales: a corporate guarantee for a subsidiary's loan, tooling supplied by a sister company, head-office costs recharged once a year. When these are left out of the report, the Transfer Pricing Officer finds them, and the adjustment is made on the officer's comparables instead of yours. Our transfer pricing work for groups in Nashik and elsewhere in Maharashtra begins with how the group actually sets prices between its entities, and the documentation is built from that.
This page reflects the law as at 1 October 2026. Section numbers are given for both the Income-tax Act, 2025 and the Income-tax Act, 1961.
Documentation and reporting
Mapping the group and its transactions
We draw the group structure and identify associated enterprises as the law defines them. Every transaction between them is then listed: purchases, sales, job work, royalties, management fees, guarantees, loans and reimbursements. A missed transaction is the most common reason a report is wrong.
Functional analysis
Who designs the product, who buys the steel, who carries the stock and who takes the credit risk. The people who do the work are interviewed, and the functions, assets and risks of each entity are recorded, because the pricing method follows from them.
Benchmarking
We select the most appropriate method and search for comparable companies or transactions. Your prices or margins are then tested against the arm's length range. Every rejection of a comparable is explained in writing, since officers examine that part first.
Transfer pricing documentation
The law requires you to keep annual documentation. Where possible, we prepare it during the year, well ahead of the deadline. If the size of the group brings in master file or country-by-country reporting, we inform you and coordinate with the group.
The accountant's report
A chartered accountant must certify the report on international transactions and specified domestic transactions. For the financial year 2025-26 this is Form 3CEB under section 92E of the Income-tax Act, 1961. From tax year 2026-27 it is Form No. 48 under section 172 of the Income-tax Act, 2025.
Specified domestic transactions
Certain transactions between related domestic parties also fall under transfer pricing. This happens mainly where one of them claims a profit-linked deduction or a concessional tax regime and the total value crosses the threshold in the law. Each year we check whether any entity in your group is caught.
Assessments and pricing policy
Transfer pricing assessments
When a case is referred to the Transfer Pricing Officer, we prepare the submissions and defend the method and comparables. Support continues through the dispute stages that follow.
Pricing policy for the year ahead
A written inter-company pricing policy is agreed before invoices are raised. Year-end adjustments then remain small and can be explained.
For manufacturers
Exports to your own overseas subsidiary
A Nashik engineering or pharma exporter may sell through its own distributor abroad. It must then show that the Indian entity earns an arm's length return for its manufacturing. We test that return against independent manufacturers, in addition to the prices paid by your other customers.
Imported components from a parent or sister company
The overseas parent may supply parts, tooling or technology to the Indian plant. In that case the price, any royalty and any technical fee all need support. Because customs valuation of related-party imports raises a similar question, we keep the two positions consistent.
Contract manufacturing and job work within a group
An Indian plant that works on material owned by a foreign group company is usually a low-risk manufacturer. Its pricing should reflect that. The agreements and the conduct of the parties should also match.
Segmenting the manufacturing results
A plant may sell both to group companies and to independent customers, yet it rarely reports those streams separately. From your cost records we build a segmented profit and loss account. The margin on related-party business can then be tested on its own, apart from the overall figure.
What we need from you
In the first year of an engagement we usually ask for the following. Later years need only the changes.
- Group structure chart with shareholdings, and the names and countries of all associated enterprises
- Audited financial statements of the Indian entity, and segment data if you have it
- Inter-company agreements: supply, distribution, licence, services, loan and guarantee
- A ledger-wise list of all transactions with group entities for the year
- Previous transfer pricing documentation, reports and any assessment orders
- Customs valuation documents for related-party imports, if any
- Names of the people we should interview on sales, purchase, production and finance
Related-party transactions under company law
Transfer pricing is a tax question. Related-party transactions under section 188 of the Companies Act, 2013 raise a governance question, which involves approval by the board and by the audit committee where there is one. In some cases shareholders must also approve. Disclosures in the financial statements follow the related-party accounting standard. One transaction often needs all three answers, and they must be consistent with each other. We prepare the tax position and check that the company-law approvals and disclosures agree with it.
How an engagement runs
Scoping in the first quarter
Early in the year, the group and its transactions are mapped and the methods are agreed. The year's invoicing can then follow the policy.
Mid-year review
We compare actual margins with the target range. Any correction is proposed while it can still be made through normal invoicing.
Year-end documentation
After the accounts close, the benchmarking and the documentation are finalised and the figures are agreed with the audited accounts.
The accountant's report
We certify the report and file it within the due date. The working papers are kept ready for any later assessment.
Section references
The Income-tax Act, 2025 applies from 1 April 2026. Its transfer pricing chapter moves the old sections 92 to 92F of the Income-tax Act, 1961 into sections 161 to 173. The main references are below.
| Subject | Income-tax Act, 2025 | Income-tax Act, 1961 | |---|---|---| | Income computed at arm's length price | Section 161 | Section 92 | | Associated enterprise | Section 162 | Section 92A | | International transaction | Section 163 | Section 92B | | Specified domestic transaction | Section 164 | Section 92BA | | Determination of arm's length price | Section 165 | Section 92C | | Reference to Transfer Pricing Officer | Section 166 | Section 92CA | | Documentation | Section 171 | Section 92D | | Accountant's report | Section 172 | Section 92E |
Common questions
Do I need transfer pricing compliance if my overseas transactions are small?
For international transactions with associated enterprises, the accountant's report has no general value threshold. If you have such a transaction, the report is needed. The size of the transactions does affect how much documentation the rules require, and we check both points for your case.
Which form applies this year, Form 3CEB or Form No. 48?
The form depends on the year being reported. The financial year 2025-26 is governed by the Income-tax Act, 1961, so its report is Form 3CEB. Tax year 2026-27 and later years are governed by the Income-tax Act, 2025, and the report is Form No. 48. Due dates are set by the law and by any extension the CBDT announces, so we confirm them for each year. CBDT's extension of 28 September 2026 for tax audit reports and returns does not apply to transfer pricing cases.
Are transactions between two Indian group companies covered?
Only some of them. Most domestic transactions between group companies are outside the definition of specified domestic transactions. Coverage arises mainly where one party claims a profit-linked deduction or uses certain concessional tax rates, and the aggregate value crosses the threshold in the law. GST valuation rules for supplies between related persons apply separately; our GST page explains them.
What happens if documentation is missing or late?
The law has separate penalties for failing to keep documentation and for failing to provide information when asked. A late accountant's report attracts a penalty under the Income-tax Act, 1961 and, from tax year 2026-27, a fixed fee under the Income-tax Act, 2025. Apart from the penalties, a weak file makes an adjustment to your income more likely. Documentation prepared during the year costs less than defending a gap later.
Can you handle a case already referred to the Transfer Pricing Officer?
Yes. We review the existing documentation and the officer's questions. Where the analysis is weak, it is rebuilt, and the submissions are prepared. If you are already represented, we can work with your current adviser.
See also: Taxation, Manufacturing finance, Business advisory
Contact the firm
About Transfer pricing, or any related matter. A phone number or an email address is enough for us to reply.
- Office
- Office at Plot 08, Eden Complex, Gangapur Road, Nashik 422222
- Hours
- 9:30 AM to 8:00 PM; other times by appointment