India Transfer Pricing Policy

Is your India subsidiary necessary to deliver TP (Transfer Pricing) Form? Attach what kinds of documents?
This web page uses Questions and Answers to let you know how to judge.

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TP-Q-10
Why kinds of scenarios will be adopted TP policy? What is the relevance between DTA and TP policy?
TP-A-10
When an Indian Tax entity would like to pay out whatever business profits, Royalty, Technical Services fees, Interests, trading amount, etc., it will adopt DTA tax rate.
Its judge criteria, please see India Tax Treaties with Other Countries. <click me
But if want to verify the above-mentioned amount if reasonable, will adopt India’s TP Policy.

TP-Q-20:   

在印度甚麼情況下, WFOE 外商投資企業不需要同時處理TP 申報和文件申報?
What are the scenarios in India, that a Wholly Foreign-Owned Entity (WFOE) is exempted from compliance of Transfer Pricing (TP) declaration and TP documentation?

TP-A-20:

*You are exempted from TP declaration if your specified domestic transactions with related enterprises do not exceed INR 20 Crore and you do not have any international transaction.

*You are exempted from TP documentation if your specified domestic transactions with related enterprises do not exceed INR 20 Crore and your international transaction do not exceed INR 1 Crore.

TP-Q-30:   

在印度甚麼情況下, WFOE 外商投資企業需要向該國的稅務局發送TP 申報? 甚麼是申報單名稱?
What are the scenarios in India, that a Wholly Foreign-Owned Entity (WFOE) is required to submit a TP declaration to the country’s tax bureau?
What is the name of the TP declaration form?

TP-A-30:

Specified domestic transactions with related enterprises exceeding INR 20 Crore or you have at least one international transaction.
It is the TP Report / Form 3CEB.

TP-Q-40:   

在印度甚麼情況下, WFOE 外商投資企業需要向該國稅務局發送TP 申請和文件? 甚麼 declaration 表單名和文檔名?
What are the scenarios in India, that a Wholly Foreign-Owned Entity (WFOE) is required to submit TP declaration and TP documentation to the country’s tax bureau? What is the name of the TP declaration form and TP documentation form?

TP-A-40:

(a) Specified domestic transactions with related enterprise exceeding INR 20 Crore OR you have at least one international transaction with related enterprise – TP Report / Form 3CEB

(b) Specified domestic transactions with related enterprise exceeding INR 20 Crore OR international transaction with related enterprise exceeding INR 1 Crore – Local File

(c) Fulfill (b) above and two of the below conditions.

(1) Consolidated Group Revenue exceeding INR 500 Crore and

(2) International transactions exceeding INR 50 Crore OR

(3) Having intangible property exceeding INR 10 Crore

– Master File – Form 3CEAA

(d) Fulfill (b) above and have more than 1 constituent entity in India

– Master File – Form 3CEAB

(e) Fulfill (b) above and have Consolidated Group Revenue in previous year >INR 6,400 Crore

(1) When Parent Company is Non-resident

– CbC Report – Form 3CEAC

(2) When Parent company is a resident or Alternate Reporting Entity in India

– CbC Report – Form 3CEAD

(3) Designation constituent entity for single filing of CbC report

– CbC Report – Form 3CEAE

India TRANSFER PRICING for professionals

Companies involved in the following transactions with Associated Enterprise are mandated to comply with the Transfer Pricing Regulation in India and therefore required to prepare Transfer Pricing (TP) Documentation.

1. Specified Domestic Transactions exceeding INR20 Crore (200 million) per year
2. International Transactions exceeding INR1 Crore (10 million) per year

Section 92-92F of Income Tax Act 1962 defines the term of transactions above.
Section 92A defines that an Associated Enterprise with relationships involves capital control and management control.
Generally, capital control includes direct or indirect holding of voting shares for at least 26% by the other enterprise or both enterprises by the same person.
While management control includes more than 50% of the board of directors are being appointed.

Threshold required for TP report and TP documentation:

Due dates and respective threshold:

Safe Harbor Rate in India has indicated the ranges which is acceptable by the Income-tax authorities and no further transfer pricing audit and consequent adjustment will be made.
For example, a software development service of up to INR 100 crore with an operating margin not less than 17% is in safe harbor.

Please be aware  below Warning:
The above contents are digested by Evershine R&D and Education Center in October 2021.
Regulations might be changed as time goes forward and different scenarios will adopt different options.
Before choosing options, please contact us or consult with your trusted professionals in this area.

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