Transfer Pricing Compliance Chart for Fy 2022-23 (Ay 2023-24)
Transfer Pricing Compliance Chart for FY 2022-23 (Ay 2023-24)
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 regulations, which include completing various activities within specific deadlines.
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.
Importance of Transfer Pricing Compliance in India
Complying with transfer pricing regulations in India 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 and maintaining accurate documentation, businesses can demonstrate their commitment to transparency and fair pricing practices.
Transfer Pricing Compliance Chart for FY 2022-23 (Ay 2023-24)
To assist businesses in complying with the Transfer Pricing regulations outlined in the Indian Income Tax Act of 1961 for the Financial Year (FY) 2022-23 (Assessment Year, AY 2023-24), 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 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 deadlines, companies can avoid penalties and demonstrate their commitment to ethical business practices.
Key Activities and Deadlines:
The key activities and Deadlines 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 deadline 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 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 these deadlines 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.
Penalties for Non-Compliance
Non-compliance with transfer pricing 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 the regulations to avoid penalties and mitigate potential risks.
