Transfer Pricing Documentation: Master File, Local File & CbCR (2026)

Transfer pricing documentation is not one document with three names. It is a three-tier system — group-level, entity-level, and jurisdiction-by- jurisdiction — built by BEPS Action 13 and adopted into Indian law through Rule 10D (Local File), Rule 10DA (Master File) and Rule 10DB (CbCR). Each tier has its own trigger, its own content and its own audience. The failure mode that actually produces adjustments is rarely a missing tier — it is three tiers that disagree with each other.

The three tiers at a glance

	Master File	Local File	CbCR
Rule / section	Rule 10DA	Rule 10D (s.92D)	Rule 10DB (s.92F)
Level	The group	One entity	Per jurisdiction, whole group
India trigger	Group consolidated revenue ≥ ₹1,000 cr	Entity revenue ≥ ₹30 cr, with an international (or specified domestic) transaction	Group consolidated revenue ≥ ₹1,000 cr
Who prepares	The group (often the ultimate parent; a designated member where the UPE’s jurisdiction does not require it)	Each in-scope entity	The ultimate parent (or the competent group member)
Core content	Group structure, business, intangibles, financial & tax positions	FAR, controlled transactions, method, benchmarking, the computation	Revenue, profit, tax, employees, tangible assets per jurisdiction
Audience	Tax authorities reviewing the group; the local entity’s file	The TPO — the working defence	Authorities via exchange; the data backbone for scrutiny

The two Indian thresholds are worth memorising: ₹30 cr switches an entity into the Local File obligation; ₹1,000 cr (group consolidated revenue) switches the group into the Master File and CbCR obligations. Entities and groups near a threshold should track it deliberately — crossing it mid-year creates the obligation for the year.

What lives where

The content map, at the level that matters:

Master File — the group story: ownership structure and all group members; the nature of the group’s businesses; the intangibles owned or licensed and the strategy for them; the group’s financial and tax positions. It answers “what does this group do, and where do the intangibles sit?”

Local File — the entity’s defence, block by block per Rule 10D: business and management overview; industry and economic conditions; the FAR profile; the controlled and uncontrolled transactions; the method selection; the comparable identification and the exclusion rationale (the Accept-Reject matrix); the arm’s length computation and workings. It answers “why is this entity’s result arm’s length?” The full checklist is in the Local File guide.

CbCR — the per-jurisdiction table: revenues, profit before tax, tax paid and payable, number of employees, tangible assets, for each jurisdiction in the group. It answers “where is the group’s activity, and what does each jurisdiction get from it?”

Consistency is the audit trap

The three tiers are built from the same facts, so they must agree. The examination starts by diffing them:

Cross-document check	What a mismatch says
Local File revenue for the controlled transaction vs CbCR revenue for the jurisdiction	The study was not built on the filed numbers
Master File intangibles list vs Local File FAR (“the entity owns no valuable intangibles”)	One of the two FARs is wrong
Intercompany agreement terms vs the study’s assumptions (price, scope, risk)	The study is documenting a transaction the group did not make
CbCR profit for the entity vs the return of income	The file does not reconcile to the filing

Each mismatch is a small thing on its own; together they are the pattern a scrutiny team looks for, because it means the documentation was produced as a pack rather than drawn from the actual records. The fix is structural: the financial data, the FAR and the transaction terms are prepared once, as shared exhibits, and every tier references them.

The contemporaneous deadline

Indian documentation must be contemporaneous: Rule 10D documentation must exist before the due date of the return of income, not be reconstructed after a notice. The mechanics of the protection:

• The penalty for non-maintenance sits at s.271AA (2% of the value of the international transaction); the related exposure for non-furnishing on notice is s.271G (2% of transaction value, or ₹2,00,000 where the value cannot be determined).
• The 30-day rule: where the Transfer Pricing Officer serves the notice under s.282BC, producing the contemporaneous documentation within 30 days keeps the s.271AA penalty off the table. The window is short and the clock starts at the notice — which is why the file must already exist.

The calendar for everything that is due, when, and what a miss costs, is in the India compliance calendar.

Building the file, practically

A Local File that survives a TPO is assembled in this order:

1. The shared exhibits first — the financials (the return numbers), the FAR profiles, the intercompany agreements, the transaction schedules.
2. The Rule 10D blocks — the checklist items in the Local File guide, each drawn from the exhibits rather than re-derived.
3. The benchmarking annex — search criteria, the Accept-Reject matrix with per-company reasons, the adjustments, the range and the placement. This is the benchmarking study itself, attached as the analytical core.
4. The Method selection record — the decision trail (why this method, why this tested party, why this PLI) as a standalone section, because it is the first thing re-litigated.
5. The index and the dates — every exhibit dated, the documentation dated as a whole, before the return due date.

If the transaction qualifies for a safe harbour election, the safe harbour record (Form 3CEFA particulars) sits alongside the Local File as the certainty layer — see safe harbours in India.

FAQ

Do I need all three tiers, or just the Local File? All three, if the thresholds are met — and the Local File is never a substitute for the others. A ₹1,200-cr group whose entities each clear ₹30 cr carries all three obligations; the Master File and CbCR fail on their own triggers, not on the Local File’s.

Who owns the Master File in an Indian group? The ultimate parent prepares it in its jurisdiction; where the UPE’s jurisdiction does not require a Master File, an entity in a jurisdiction that does (often the Indian entity for an Indian UPE structure) maintains it. The file must be available to the Indian entity that needs it — availability, not location, is the requirement.

How often is the documentation rebuilt? The Local File is a yearly work product (the “annual update” block of Rule 10D is not a formality — the benchmarking is re-run and the comparables re-screened each year). The Master File is updated annually in practice, and immediately when group structure, intangibles or business mix changes. The CbCR is yearly, by construction.

Is the documentation filed, or just kept? The Local File is maintained (available on demand, contemporaneous); the Form 3CEB accountant’s report is filed with the return; the CbCR is filed with the parent’s return where the group is in scope. “Kept but never available” fails the test the moment a s.282BC notice arrives.