Three-tier TP Documentation & threshold Requirement

Three-tier Transfer Pricing Documentation & threshold Requirement; III-Tier; III-Tier

Taxpayers are expected to maintain, on a yearly basis, a collection of detailed information and documentation relating to international transactions performed with AEs or specified domestic transactions. Rule 10D of the Income Tax Rules of 1962 provides for accurate records and documents to be kept by the taxpayer. These specifications may generally be divided into two sections.

The very first part of the rule sets out required documents/data which must also be preserved by a taxpayer; the second part of the rule specifies that sufficient documentation is kept to support the data/analysis/studies recorded below the first part of the law. The second part also includes a suggested list of such supporting documentation, like government papers, reports, surveys, technical papers/market research studies performed by credible organizations, price publications, relevant agreements, agreements, and communications.

Taxpayers with cumulative foreign transactions just below the defined INR 10 million threshold and specified domestic transactions below the INR 50 million thresholds are exempted from keeping the defined documents. However, even in these situations, it is crucial that the documents preserved should be sufficient to sustain the price of the arms-length of international transactions or defined domestic transactions.

Both required records and details must be preserved at the same time (to the extent possible) and must be in order by the due date of the filing of the tax return. Businesses subject to the regulations are usually expected to file their tax returns on or before 30 November following the conclusion of the tax year in question. The required records must be retained for a period of nine years from the end of the applicable tax year and must be revised on a continual basis an annual basis. Supporting document provisions also extend to multinational companies whose income is subject to Indian tax liability.

Applicable Transfer Pricing Documentation; Transfer Pricing; Transfer Pricing



Applicable -Form 3CEB Chartered Accountant’s report in respect of the international transaction Within 8 months from the end of the financial year.
Last Date:- 31st October 2020
TP Study Report Analysis to show international transactions are at arm’s length Within 8 months from the end of the financial year.
Last Date:- 31st October 2020

Structure of three-tier transfer pricing documentation:; sturture of III-Tier; the structure of III-Tier·         Local File-This must be recorded by the Organization itself.

·         Master File-Requires to be filed with the IT department.

·         Nation by Nation Study – Requires to be sent to the IT Department.

Applicability of CbCR



Consolidated revenue of International Group INR 5500 Crore


Turnover to be taken for Master File is the Accounting Year (i.e., for F.Y 2019-20, accounting Year will be 2019-20)

Compliance applicable on Transfer Pricing

Master File– Forms and Timelines

Section 92D (Master File Forms)


Conditions Apply


Form 3CEAA Part A: – Basic Limited details to be furnished. Every constituent entity/ designated constituent entity of an international group has to file Part-A irrespective of the turnover. Within eight months from the end of the FY.
For Assessment Year 2020-21:- 30th November 2020
Part B: – Detailed details to be furnished. (Broadly same as OECD Master File) 1.       Total revenue > 500 cr; and
2.       Aggregate international transactions> 50 cr or; intangible related transactions > 10 cr.
Form 3CEAB To notify the Constituent Entity designated for furnishing Master File When there is more than one CE in India. 30 days before the due date of furnishing Form 3CEAA.
For Assessment Year 2020-21:- 31st October 2020

Transfer pricing rules wouldn’t really apply if the arms-length price results in a downward revision of the income taxed in India.

Burden of proof

The responsibility of establishing the arm’s length existence of the transaction rests mainly with the taxpayer. If during the audit process on the basis of content, details, or records in their possession, the tax authorities are of the opinion that the arm’s-length price did not apply to the transaction or that the taxpayer did not maintain / Produce sufficient and accurate documentation / Details/information, the overall taxable income of the taxpayers may be computed as follows after the hearing right has been provided.

                       Compliance Under CBCR

CbCR – Forms and Timelines :

Particulars Purpose When to file? Timeline
Form 3CEAC To intimate Alternate Reporting Entity

or PE (Whether itself or some other)

If international Total revenue > 5500 crores (If CE is resident in India) 2 months prior to the due date for furnishing Form 3CEAD.
To intimate Alternate Reporting Entity

or PE (Whether itself or some other)

For Assessment Year 2020-21:- 31st October 2020
Form 3CEAC CBCR Reporting requirement If international  Total revenue > 5500 crores Within twelve months following the end of reporting accounting year.
For Assessment Year 2020-21:- 31st December 2020
Form 3CEAC To notify the Constituent Entity designated for furnishing CBCR, only if there is more than one Constituent Entity in India (and conditions given in note 1 below are fulfilled) If international Total revenue > 5500 crores Not Specified yet as per the Final Rules.
S.No Turnover Compliance to be made
1. a)   Upto 500 Crores All Constituent Entity /Designated Constituent Entity of the international group to file Part A of Form 3CEAA
    b)   >500 crores but < 5500 crores
    c)   International transaction < 50 crore and;
    d)   Intangible related transactions < 10 crores
2. a) >   500 crores but < 5500 crores; and Part A and Part B of Form 3CEAA
    b)   International transaction > 50 crore; or
    c)   Intangible related transactions > 10 crores
3. a)   > 5500 crores CBCR requirements apply on entity
4. a) >5500 crores; and Details to be Maintain and furnish Master File. Also, CBCR requirements apply on entity
    b)   International transaction > 50 crores; or
    c)   Intangible related transactions > 10 crores

Time-Time for Creating Transfer Pricing Documents; Creating Transfer pricing; Creating Transfer pricing

Regrettably, the timeline for processing the report varies from country to country. Many countries need details to be ready when a tax return is filed. Other countries want to see something ready at the time of the audit.

Even so, the whole rationale of the transfer pricing legislation is to consciously enforce the Arm’s Length concept. You do this by determining the right transfer price before the actual transaction takes place. What this means is that you build up the transfer pricing paperwork over the year when you’re doing the business. Not at end of each year, like that.



The latest events have given rise to a renewed emphasis on transfer pricing practices. Standard reporting standards are now in place to address (assumed) abusive tax practices.

The aims of such provisions are, first of all, to increase awareness of the transfer pricing legislation and the environment of adherence. In addition, the report provides policymakers with an analysis of possible threats. In the end, it makes the future audit much simpler.

There are many three reports to be given. Master File, Local File, Country-by-Country Chart. The Country-by-Country report is for major Multi-National Companies with a turnover of Dollars 750 million or more.

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