Three distinct obligations
India’s transfer pricing documentation separates transaction-level records, a group Master File and a country-by-country report (CbCR). For periods governed by the Income-tax Act, 1961, the Master File sits under Section 92D and Rule 10DA; CbCR sits under Section 286 and Rule 10DB. Apply the legislation for the relevant year. Section 536 of the Income-tax Act, 2025 governs the transition; the new Act and 2026 Rules use separate section and form numbers.
| Requirement | 1961 Act and 1962 Rules | 2025 Act and 2026 Rules | What it covers |
|---|---|---|---|
| Local documentation and accountant’s report | Sections 92D(1)(i) and 92E; Rule 10D; Form 3CEB for the report | Sections 171 and 172; Rules 84 and 85; Form 48 for the report | Local transaction records and benchmarking are separate from the accountant’s report. |
| Group Master File | Section 92D(1)(ii) and (4); Rule 10DA; Form 3CEAA | Section 171; Rule 123; Form 56 | Group profile in Part A; more detailed material in Part B if the tests are met. |
| Master File designation | Rule 10DA(4); Form 3CEAB | Rule 123(4); Form 57 | Designated constituent entity where the rule permits. |
| CbCR notification, report and designation | Section 286; Rule 10DB; Forms 3CEAC, 3CEAD and 3CEAE | Section 511; Rule 124; Forms 58, 59 and 60 | Separate notification, jurisdiction-by-jurisdiction reporting and local designation. |
For legacy Local File records, Rule 10D(2) relaxes the detailed documentation requirements for international transactions with an aggregate book value of up to ₹1 crore, but still requires substantiation of arm’s length pricing. That relaxation does not remove the Section 92E reporting requirement. Section 92BA’s ₹20 crore test concerns aggregate transactions that fall within its specified domestic categories.
Master File: determine Part A and Part B separately
Part A of Form 3CEAA is required of a constituent entity within the rule even when the monetary tests in Rule 10DA(1) are not met. It identifies the entity, group and relevant constituent entities. Part B requires both consolidated group revenue above ₹500 crore for the accounting year and either international transactions above ₹50 crore or international transactions relating to the purchase, sale, transfer, lease or use of intangible property above ₹10 crore, using the accounting-year book figures for the transaction tests. Equality does not satisfy a test expressed as “exceeds”. Convert foreign-currency group revenue using the prescribed telegraphic transfer buying rate on the accounting year’s last day.
Form 3CEAA is due on or before the applicable Section 139(1) return due date. For a taxpayer subject to transfer pricing reporting, the usual legacy date is 30 November, subject to an applicable extension. Where multiple constituent entities are required to furnish the information under Rule 10DA(2), one may furnish Form 3CEAA under Rule 10DA(4) if the group designates it and conveys that designation on Form 3CEAB at least 30 days before the Master File due date. Reconcile the entities actually covered and any separate Part A obligations; a designation is not a universal exemption.
Under Rule 123, the Part A/Part B structure and monetary tests continue. Form 56 follows the due date specified under Section 263(1)(c), with designation in Form 57 30 days earlier. Keep the detailed information for eight years from the end of the relevant assessment year under Rule 10DA(6), or nine years from the end of the relevant tax year under Rule 123(5).
| Group revenue | Entity international transactions | Part B result |
|---|---|---|
| ₹450 crore | ₹80 crore | No: group test fails. |
| ₹800 crore | ₹35 crore, no intangible transactions | No: neither transaction test is met. |
| ₹1,200 crore | ₹65 crore | Yes: group and general transaction tests are met. |
| ₹900 crore | ₹25 crore tangible and ₹12 crore software licence | Yes, assuming the licence is an eligible intangible transaction. |
| ₹20,000 crore | ₹120 crore | Yes; CbCR still requires a separate test for the preceding reporting period and filing entity. |
| Part B area | Evidence and disclosures |
|---|---|
| Organisation | Group entities and addresses, and ownership and legal structure. |
| Business | Profit drivers; supply chains for the five largest products or services by revenue and other products or services above 5% of group revenue; main markets; important intragroup service arrangements; principal functions, assets and risks; significant restructurings. |
| Intangibles | Strategy, principal R&D locations and management, ownership of important intangibles, relevant agreements and pricing policies, and important intragroup transfers. |
| Finance | Funding arrangements, top ten unrelated lenders, central financing entities and related transfer pricing policies. |
| Financial and tax position | Consolidated financial statements; existing unilateral APAs and other tax rulings concerning the allocation of income among countries. |
Country-by-country reporting: check the preceding year and the filing entity
Under Section 286 and Rule 10DB, the exclusion applies where consolidated group revenue for the accounting year preceding the reporting accounting year does not exceed ₹6,400 crore. This is a separate rupee threshold, not an annual translation of the OECD’s euro amount. The prescribed accounting year-end telegraphic transfer buying rate applies to foreign-currency consolidated revenue.
An Indian-resident parent entity or alternate reporting entity files Form 3CEAD within 12 months from the end of the reporting accounting year. An Indian-resident constituent entity of a foreign-parented group within scope uses Form 3CEAC to identify whether it is the alternate reporting entity or provide the identity and residence of the parent or alternate reporting entity, as applicable. This notification is due two months before the Section 286(2) report deadline.
Check local filing under Section 286(4) separately. It can arise if the parent is not required to report in its home jurisdiction, there is no qualifying exchange agreement with India, or a systemic failure has been communicated to the Indian constituent entity. The local report is generally due 12 months from the end of the reporting year. For an intimated systemic failure, the rule gives six months from the end of the month of intimation. A qualifying foreign alternate report can displace local filing where all Section 286(5) conditions are met; merely appointing an alternate entity is insufficient. For multiple Indian entities, Section 286(4) separately allows a designated local reporter where the prescribed requirements are met; check Form 3CEAE. Under Section 511 and Rule 124 the corresponding forms are 58, 59 and 60.
Report jurisdiction-level aggregates for related and unrelated revenue, profit or loss before tax, income tax paid and accrued, stated capital, accumulated earnings, employees and tangible assets other than cash or cash equivalents. Identify constituent entities and main activities and provide necessary explanatory information. Confirm the current electronic submission process for the specific form and period; keep the filed copy and acknowledgement.
Penalties under the 1961 Act
Under Section 271AA(2), failure to furnish the information and documents required by Section 92D(4) may lead to a ₹5 lakh penalty. Section 271AA(1) covers different record and transaction defaults and Section 271BA covers failure to furnish the accountant’s report. Section 273B provides reasonable-cause relief for covered failures if the taxpayer proves it.
Under Section 271GB, a report filing default can attract ₹5,000 per day for the first month and ₹15,000 per day thereafter. Failure to supply information requested under Section 286(6) can attract ₹5,000 per day from the day after the response period expires. Continuing default after service of an order imposing penalty under Section 271GB(1) or (2) can attract ₹50,000 per day from service, as provided by subsection (3). These provisions do not create the same daily tariff merely for late Form 3CEAC.
The authority may direct a ₹5 lakh penalty where the reporting entity knows the report is inaccurate at filing but fails to inform the authority; discovers an inaccuracy and fails to notify the authority and furnish a corrected report within 15 days; or gives inaccurate information or a document in response to a Section 286(6) notice. The penalty provisions are distinct from filing deadlines. For the new law, see Section 442(2) for the Master File and Section 459 for CbCR.
Six worked examples
The examples are fictional and use the legacy forms and rules. Currency rates are assumed to be the prescribed buying rates for the relevant calculation, not quoted historic market rates.
1. Both Master File tests are met
Dynatech’s FY 2024–25 group revenue is USD 75 million. At ₹83.33 per USD, that is ₹624.975 crore (about ₹624.98 crore). Its Indian entity records ₹42 crore of contract software services, ₹4 crore of marketing cost reimbursements and ₹6 crore of server purchases, assumed to be international transactions recorded in the books. The sum is ₹52 crore, with no intangible transactions. Both tests are met; prepare Parts A and B and file by the applicable Section 139(1) deadline. Omitting required information can expose the entity to a penalty under Section 271AA(2).
2. The intangible transaction test applies
NextGen’s Swiss group reports CHF 100 million; at ₹95 per CHF, that is ₹950 crore. The Indian entity records ₹16 crore of clinical trial support and ₹12 crore of patent royalty and know-how licence fees, totaling ₹28 crore. The general ₹50 crore test is not met, but the ₹12 crore assumed qualifying intangible amount exceeds ₹10 crore. Both group revenue and an alternative transaction test are met; prepare Parts A and B.
3. One group designates one Master File reporter
Global Auto has current accounting-year revenue of ₹12,000 crore. Its three Indian entities record ₹250 crore, ₹80 crore and ₹60 crore of international transactions respectively, so each passes both Part B tests. The group designates the manufacturing entity under Rule 10DA(4). If the applicable Form 3CEAA due date is 30 November 2025, convey the designation in Form 3CEAB by 31 October 2025, 30 days earlier, and have the designated entity file Form 3CEAA. Confirm which entities are covered; the rule does not prescribe a separate acknowledgement-reference filing by each covered entity. The group’s current-year ₹12,000 crore does not on its own establish CbCR for that same reporting year.
4. Indian parent files the CbC report
Bharat Conglomerate is an Indian-resident parent with 45 operating subsidiaries across 18 countries. Assume consolidated group revenue in the accounting year immediately preceding FY 2023–24 was ₹8,500 crore. The threshold is exceeded. It files Form 3CEAD for FY 2023–24 by 31 March 2025. The report contains jurisdictional totals, constituent entities and activities, and explanatory information. An analogous group reporting FY 2024–25 under the same rules would have a 31 March 2026 deadline if in scope.
5. US parent and Indian constituent notification
The US parent’s preceding accounting-year revenue is USD 25 billion. At an assumed ₹83 per USD, that is ₹2,07,500 crore, above ₹6,400 crore. It is required to file in the United States and does so, the US–India CbC exchange arrangement covers the year, and no systemic failure has been communicated to the Indian entity. On those facts no Indian local report is required, but the Indian constituent entity still files Form 3CEAC with the particulars required by the form. For a reporting year ending 31 December 2024, the Indian reference report deadline is 31 December 2025 and the notification is due 31 October 2025, assuming the ordinary deadlines apply.
6. Late CbC report
Assume MegaTech’s preceding accounting-year group revenue was ₹7,200 crore and the Indian parent’s FY 2023–24 report was due on 31 March 2025. Filing on 30 June 2025 gives 91 days of continuing default on the stated counting assumption. April: 30 days × ₹5,000 = ₹1,50,000. May and June: 61 days × ₹15,000 = ₹9,15,000. The illustrated penalty exposure is ₹10,65,000 before considering reasonable cause, and assuming no penalty order was served while the default continued.
Practical controls
Reconcile current and preceding group revenue separately, document the buying rates, and confirm the reporting calendar and designation. Align the Master File business and intangibles narrative with the local analysis of functions, assets and risks. Verify form edition, filing authority and portal verification method for the year. Resolve data access early and retain submissions, acknowledgements and requests for missing information.
Frequently asked questions
What if the foreign parent withholds the Master File?
Escalate requests and document the steps taken. The Indian filing duty does not disappear; a reasonable-cause claim under Section 273B depends on evidence and the facts.
How do you convert foreign-currency group revenue?
Use the prescribed telegraphic transfer buying rate on the last day of the accounting year relevant to the test. Verify the rate source, date and currency; do not substitute an annual average.
Does a holding company without operations skip Part A?
A constituent entity within Rule 10DA must generally furnish Part A even if the monetary tests are not met. Check statutory status and any applicable group designation.
What is a constituent entity?
Section 286(9) includes entities consolidated or that would be consolidated if publicly listed, entities excluded solely on size or materiality grounds, and qualifying permanent establishments for which separate financial statements are prepared for the stated purposes.
What if the group records are in a foreign language?
Prepare the Indian form in accordance with the notified fields and instructions and keep translations sufficient to support the filing. Check any specific direction for a document; there is no blanket certified-translation requirement stated here.
How is a parent different from an alternate reporting entity?
The parent meets the controlling-interest and consolidation tests and is not itself controlled by another qualifying group constituent entity. An alternate reporting entity is designated by the group to report on its behalf; for a foreign alternate filer to displace local filing, verify the specific conditions in Section 286(5).
Sources
- Income-tax Act, 1961: sections 92D, 92E, 271AA, 271BA, 271GB, 273B and 286
- Income Tax Department: transfer pricing and Rule 10DA guidance
- Income-tax Act, 2025: sections 171, 172, 511 and 536
- Notified Income-tax Rules, 2026: Rules 84, 123 and 124
- IRS: competent authority arrangements including India’s CbC exchange arrangement
- CBDT Notification 3/2020: changes to Rules 10DA and 10DB
- Gazette copy of CBDT Notification 31/2021: ₹6,400 crore threshold and group designation
- United States–India competent authority arrangement on CbC exchange
- IRS country-by-country reporting jurisdiction status table
- CBDT Tax Bulletin: Notification 88/2018 and Rule 10DB local reporting deadlines