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About Transfer Pricing Advisory

Transfer Pricing in India is the process of valuation offered by one member of the multinational group to another member outside the country for exchange of goods, services and other intangibles. It is a continuous task demanding businesses to apply a systematic approach to risk management and control with compliance obligations such as documentation, records, and processes.

Our consultants along with tax advisors assist you in planning, streamlining, managing, and solving complicated areas to mitigate risk and then align it with your global business goals.  

Pre assessments & planning:

Structuring:

Documentations & Filings

Issuance of Accountant’s Report / Transfer Pricing Certification (Form 3CEB) as required u/s 92E read with Rule 10E of the Rules

Transfer Pricing Study

A transfer pricing study analyses and examines the pricing of transactions between related two or more associates. By applying and documenting various test methods, it is determined whether the transactions are conducted under market conditions and can survive the scrutiny of tax authorities. Hence, the purpose of transfer pricing is to justify how a particular method is selected for enterprises and transactions being reviewed.

Our expert team in transfer pricing audit carefully carries out the study that aligns the business prospect with government regulations and norms while focusing on identifying the most appropriate comparable for your product/services.

The fundamentals of transfer pricing study include FAR analysis and Selection of Tested Party.

FAR Analysis:

FAR analysis combines the assessment of Functions performed, Assets employed, and Risk assumed in the transaction and documentation of the result into Arm Length Price (ALP) which comes under the Act as a price which is applied or proposed to be applied in a transaction between persons other than associated enterprises in uncontrolled conditions.

Functional Analysis: Analyzing the categories/subcategories of the entity’s function to understand the value chain / supply chain of functions performed

Asset Analysis: Evaluating the Assets Deployed by MNE for international Transaction or Specified domestic Transaction search comparable or say tested party easily

Risk Analysis: Comparison of risk assumption by the parties to adjust that into same level and eliminate any material difference

Selection of Tested Party

A tested party in an international transaction is the reference for international transaction. Selection of tested party influences the most appropriate transfer pricing method to be selected. Entity with the least complex function and not owning any valuable intangible is usually selected as the tested party as testing of margin of such an entity would require least adjustment. Selection of comparable is based on economic characterization of the tested party.

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