Transfer Pricing Compliance Chart for FY 2024-25 (AY 2025-26)

Transfer pricing refers to the pricing of transactions between related entities within a multinational enterprise (MNE) group. The Indian Income Tax Act of 1961 incorporates transfer pricing regulations to ensure fairness and transparency in such transactions. Entities operating in India are required to comply with these transfer pricing for AY regulations, which include completing various activities within specific deadlines. This article provides Transfer Pricing Compliance Chart for FY 2024-25, including the transfer pricing forms and transfer pricing audit due date.

Transfer Pricing

Transfer pricing refers to pricing goods, services, or intangible assets between related entities within a multinational enterprise. In the Indian context, transfer pricing regulations are governed by Section 92 of the Income Tax Act and the Income Tax Rules, 1962. The objective is to determine arm's length prices for such transactions, ensuring that profits are pretty allocated and that the appropriate amount of tax is paid in India. It is necessary to file the appropriate form before the transfer pricing audit due date to comply with the regulations.

Importance of Transfer Pricing Compliance in India

Complying with transfer pricing regulations in India and due date for transfer pricing audit is crucial for multinational companies operating within the country. It helps them avoid penalties, tax disputes, and reputational risks while fostering a positive relationship with tax authorities. By adhering to the prescribed rules, filing forms before the transfer pricing due date for FY 2024-25 and maintaining accurate documentation, businesses can demonstrate their commitment to transparency and fair pricing practices.

Transfer Pricing Compliance Chart for FY 2024-25 (AY 2025-26)

To assist businesses in complying with the Transfer Pricing regulations outlined in the Indian Income Tax Act of 1961 for the Financial Year (FY) 2024-25 (Assessment Year, AY 2025-26), a comprehensive Transfer Pricing Compliance Chart has been prepared. This chart provides the following:

Details on the activities to be undertaken.
Relevant legal sections.
Required transfer pricing form numbers.
Respective deadlines that entities must adhere to to ensure compliance.

The following table presents the specific information for each activity:

Activity	Section	Form No.	Deadline
Transfer Pricing Audit	92E	3CEB	31-Oct-2023
Transfer Pricing Documentation	92D	-	31-Oct-2023
Return of Income (with Transfer Pricing Provisions)	139	-	30-Nov-2023
Master File	92D (4)	3CEAA	30-Nov-2023
Intimation by Designated Constituent Entity (DCE)	92D (4)	3CEAB	31-Oct-2023
Intimation by DCE	286 (1)	3CEAC	Two months before the due date for furnishing of CbCR-Form
Country-by-Country Reporting (CbCR)	286 (2)	3CEAD	One year from the end of reporting Accounting year (i.e., 30-Dec-2023)
Audit Report (with Transfer Pricing Provisions)	44AB	-	31-Oct-2023
Safe Harbour Application for International Transactions	92CB	3CEFA	30-Nov-2023
Safe Harbour Application for Specified Domestic Transactions	92CB	3CEFB	30-Nov-2023

By adhering to the prescribed transfer pricing due date for FY 2024-25, companies can avoid penalties and demonstrate their commitment to ethical business practices.

Key Activities and Deadlines:

The key activities and tax audit due date for transfer pricing are explained in detail below:

Transfer Pricing Audit:

Under Section 92E of the Indian Income Tax Act, entities are required to undergo a transfer pricing audit. This involves reviewing and documenting the transfer pricing policies and transactions with related parties. The transfer pricing audit due date for filing Form 3CEB, which provides details of the transfer pricing audit, is 31st October 2023.

Transfer Pricing Documentation:

Section 92D mandates the maintenance of transfer pricing documentation, which substantiates the arm's length nature of the transactions. This documentation must be in place by the tax audit due date for transfer pricing 31st October 2023.

Return of Income (with Transfer Pricing Provisions):

Entities subject to transfer pricing provisions must file their income tax returns under Section 139. The deadline for filing the return of income is 30th November 2023.

Master File:

Entities meeting the criteria outlined in Section 92D(4) and Rule 10DA must prepare and file a Master File using Form 3CEAA. The deadline for submission is 30th November 2023.

Intimation by Designated Constituent Entity (DCE):

Section 92D(4) and Rule 10DA state that Designated Constituent Entities (DCEs) must intimate their information by filing Form 3CEAB by 31st October 2023.

Intimation by DCE:

Under Section 286(1) and Rule 10DB, entities must provide information about the multinational group structure by filing Form 3CEAC two months before the due date for furnishing the Country by Country Reporting (CbCR) form.

Country-by-Country Reporting (CbCR):

Section 286(2) and (4), along with Rule 10DB, require entities to submit Form 3CEAD for Country by Country Reporting. The deadline for filing this form is 12 months from the end of the reporting Accounting year, i.e., 30th December 2023. Please note:

Accounting Year refers to:

The previous year was for entities with resident parent entities in India.

The annual accounting period for entities whose parent entities of the international group prepare financial statements under their resident country or territory's applicable accounting standards or laws.
Reporting Accounting Year pertains to the accounting year for which the financial and operational results should be included in the report mentioned in sub-section (2) and (4).

Entities engaged in international transactions must adhere to the tax audit due date for transfer pricing to comply fully with the Transfer Pricing provisions of the Indian Income Tax Act. Failure to meet these deadlines may result in penalties under the Act. Hence, it is recommended that entities carefully plan their activities according to the provided schedule to ensure compliance with the due date for transfer pricing audit.

Penalties for Non-Compliance

Non-compliance with due date for transfer pricing audit and regulations in India can lead to penalties and adverse consequences for businesses. The Income Tax Department has the authority to impose penalties ranging from 100% to 300% of the under-reported income attributable to the transfer pricing adjustment. Therefore, businesses must comply with transfer pricing due date for FY 2024-25, regulations to avoid penalties and mitigate potential risks. It is important to do necessary filings before the TP audit due date.

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Frequently Asked Questions

Common questions about Transfer Pricing Compliance for FY 2024.

Transfer pricing refers to the pricing of transactions between related entities within a multinational enterprise (MNE) group. It is crucial for multinational companies operating in India to comply with transfer pricing regulations to ensure fair pricing practices, avoid penalties, tax disputes, and maintain a positive relationship with tax authorities.

Adhering to the transfer pricing compliance chart and due dates is essential for businesses to avoid penalties, demonstrate their commitment to transparency, and comply with the Indian Income Tax Act of 1961. Failure to meet the prescribed deadlines may result in severe penalties and adverse consequences.

The deadline for filing the Transfer Pricing Audit (Form 3CEB) for FY 2024-25 is 31st October 2023, as per Section 92E of the Indian Income Tax Act.

The Master File provides an overview of the multinational group's business operations, transfer pricing policies, and global allocation of income and economic activity. Entities meeting the prescribed criteria must file Form 3CEAA by 30th November 2023.

Country-by-Country Reporting (CbCR) is a report that provides information about the global allocation of income, taxes paid, and other indicators of an MNE group. The deadline for filing Form 3CEAD for CbCR is one year from the end of the reporting accounting year, i.e., 30th December 2023.

Non-compliance with transfer pricing regulations in India can lead to severe penalties ranging from 100% to 300% of the under-reported income attributable to the transfer pricing adjustment. It may also result in tax disputes and reputational risks for businesses.

The deadline for filing the Return of Income (with Transfer Pricing Provisions) is 30th November 2023, as per Section 139 of the Indian Income Tax Act.

The Safe Harbour Application allows taxpayers to opt for a pre-determined set of criteria to determine the arm's length price for their international transactions or specified domestic transactions. The deadline for filing Form 3CEFA for international transactions and Form 3CEFB for specified domestic transactions is 30th November 2023.

As per Section 92D of the Indian Income Tax Act, entities must maintain Transfer Pricing Documentation to substantiate the arm's length nature of their transactions with related parties. The documentation must be in place by the tax audit due date for transfer pricing, which is 31st October 2023.

The Intimation by Designated Constituent Entity (DCE) is a requirement under Section 92D(4) and Rule 10DA, where DCEs must provide information about the multinational group structure. The deadline for filing Form 3CEAB is 31st October 2023, and for Form 3CEAC, it is two months before the due date for furnishing the CbCR form.