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Transfer pricing rules govern the prices at which transactions occur between related parties (associated enterprises) in different countries — such as an Indian subsidiary paying royalties to its US parent. Indian TP regulations (Sections 92–92F of the Income Tax Act) apply to every taxpayer with international transactions with associated enterprises, regardless of profitability. The arm's length price must be documented in a Transfer Pricing Study Report.
A DTAA (Tax Treaty) is a bilateral agreement preventing the same income from being taxed twice. India's DTAAs with the USA, UK, Singapore, and Mauritius each contain specific provisions on dividends, interest, royalties, capital gains, and employment income. By correctly applying treaty rates and obtaining a Tax Residency Certificate (TRC), businesses and NRIs can significantly reduce their Indian tax burden on cross-border income.
Form 15CA is an online declaration by the remitter providing details of the foreign remittance and its taxability under the Income Tax Act and applicable DTAA. Form 15CB is a CA certificate confirming the TDS rate and amount deducted on the remittance. Both are required before making most payments to non-residents exceeding ₹5 lakh per financial year. Certain payments listed in Rule 37BB are exempt.
An APA is a prospective arrangement between a taxpayer and the Income Tax Department (and optionally a foreign tax authority in a Bilateral APA) that pre-agrees the TP methodology and arm's length price for related-party transactions for up to 5 years (with 4 rollback years). APAs eliminate transfer pricing adjustment risk, significantly reduce litigation costs, and are especially valuable for companies with large recurring intercompany service, royalty, or management charge transactions.
CbCR (Form 3CEAD) requires the ultimate parent of an MNE group with consolidated revenue of ₹5,500 crore or more to report revenue, profit, taxes, employees, and assets across all operating countries. The Master File (Form 3CEAA) provides a high-level overview of the global business, TP policies, and intangible asset structure. Indian constituent entities must also file a Local File (Form 3CEFA) for their specific intercompany transactions.