Transfer Pricing and Form 3CEB
A company with international transactions with associated enterprises, or specified domestic transactions above ₹20 crore, must obtain an accountant's report on them. For financial year 2025-26 that is Form 3CEB under section 92E of the Income-tax Act, 1961, due by 31 October 2026; from tax year 2026-27 it is Form 48 under section 172 of the Income-tax Act, 2025 and Rule 85 of the Income-tax Rules, 2026. We prepare the report and the transfer pricing documentation, including the benchmarking study, for foreign-owned subsidiaries and Indian groups, from our Chennai office.
Who needs a transfer pricing report?
Every person who has entered into an international transaction with an associated enterprise, or a specified domestic transaction, must keep transfer pricing documentation and obtain an accountant's report before the specified date (sections 92D and 92E of the 1961 Act; sections 171 and 172 of the 2025 Act). In practice this covers Indian subsidiaries and branches of foreign groups — software and capability centres, distributors, contract manufacturers — and Indian companies with subsidiaries abroad. Specified domestic transactions are covered only when their aggregate value exceeds ₹20 crore in the year (section 164 of the 2025 Act).
What are the key dates and thresholds?
| Item | Requirement | Law |
|---|---|---|
| Accountant's report, FY 2025-26 | Form 3CEB by 31 October 2026 | Section 92E, Income-tax Act, 1961 |
| Accountant's report, tax year 2026-27 onwards | Form 48, one month before the return due date (31 October 2027 for tax year 2026-27) | Section 172, Income-tax Act, 2025; Rule 85, Income-tax Rules, 2026 |
| Documentation | Required unless international transactions are ₹1 crore or less in the year | Section 171; Rule 84(2) |
| Specified domestic transactions | Covered when their aggregate value exceeds ₹20 crore | Section 164 |
| Master file (Form 56) | Group revenue above ₹500 crore and either international transactions above ₹50 crore or intangibles above ₹10 crore; Part A is filed by every Indian constituent of an international group | Rule 123, Income-tax Rules, 2026 |
| Country-by-country report | Group consolidated revenue of ₹6,400 crore or more | Rule 124 |
| Safe harbour | Optional, for a block of three tax years from 2026-27 — for example IT and IT-enabled services at an operating margin of at least 15.5% where revenue does not exceed ₹2,000 crore | Rule 89 |
| Block determination | Arm's length price fixed for one year can, at the taxpayer's option, apply to similar transactions in the next two years | Section 166(9)–(12), from 1 April 2026 |
What goes into transfer pricing documentation?
A description of the group and the Indian entity, a functional analysis of functions performed, assets used and risks assumed, the characterisation of each transaction, selection of the most appropriate method (comparable uncontrolled price, resale price, cost plus, profit split, transactional net margin or other method), a benchmarking search of comparable companies, and the computation of the arm's length price or range.
What do foreign-owned subsidiaries usually report?
Capability centres and service subsidiaries typically report software or IT-enabled services to the parent, reimbursements of costs, management fees, royalties and interest on loans from the group. Each is benchmarked separately, and the safe harbour rules may offer an alternative for eligible transactions.
What are the penalties?
Under the 2025 Act, failure to keep or maintain documentation attracts a penalty of 2% of the value of each international transaction or specified domestic transaction (section 442(1)), failure to furnish the master file ₹5 lakh (section 442(2)), and failure to furnish documents when asked a further 2% (section 457). A late accountant's report now attracts a fee under section 428(d) — ₹50,000 for a delay of up to one month and ₹1 lakh after that — in place of the old ₹1 lakh penalty under section 271BA of the 1961 Act, which continues to apply to years up to 2025-26.
About V Viswanathan & Associates
- Chartered Accountants, FRN 013713S— Practising since 2012 from G-131, Spencer Plaza, Anna Salai, Chennai.
- IBBI Registered Valuer— Securities and financial assets, CA V. Viswanathan (IBBI/RV/03/2019/12333).
- FCA, ACS, CFE— Company law, tax and forensic accounting under one roof.
- Across India— Served from Chennai through video consultations and digitally signed reports and filings.
Frequently Asked Questions
What is Form 48?
It is the accountant's report on international transactions and specified domestic transactions under section 172 of the Income-tax Act, 2025 and Rule 85 of the Income-tax Rules, 2026, which replaces Form 3CEB from tax year 2026-27. Form 3CEB still applies to financial year 2025-26.
What is the due date for Form 3CEB for FY 2025-26?
31 October 2026, one month before the 30 November due date of the return for companies with international transactions.
Is documentation needed if transactions are small?
Detailed documentation is not required if the aggregate value of international transactions is ₹1 crore or less in the year (Rule 84(2) of the 2026 Rules), but the accountant's report is still required.
Can a subsidiary opt for safe harbour?
Yes, for eligible transactions under Rule 89 of the Income-tax Rules, 2026 — for example IT and IT-enabled services at an operating margin of at least 15.5% where revenue does not exceed ₹2,000 crore — for a block of three tax years from 2026-27.
What happens if the report is filed late?
From tax year 2026-27 a fee applies under section 428(d) of the 2025 Act: ₹50,000 for a delay of up to one month and ₹1 lakh after that. For earlier years the penalty under section 271BA of the 1961 Act is ₹1 lakh.
Do you work with companies outside Chennai?
Yes. We work with companies across India from our office at Spencer Plaza, Anna Salai, Chennai, through video consultations, secure document sharing and digitally signed reports and filings. We do not have offices in other cities.
Related Guides
Taxation of Foreign Subsidiaries in India
Corporate tax and treaty questions for foreign-owned companies.
Law stated as at 27 Oct 2026. Official sources: FEMA and RBI directions (RBI), Companies Act, 2013 (MCA), Registered valuers (IBBI), Income-tax Act, 2025 and Rules, 2026 (CBDT). Reviewed by CA V. Viswanathan, FCA, ACS, CFE, IBBI Registered Valuer (IBBI/RV/03/2019/12333).
Transfer Pricing and Form 3CEB
Talk to us about your transfer pricing report and documentation.