India Transfer Pricing: The Complete s.92 Overview (2026)

India’s transfer pricing regime is built on section 92 of the Income-tax Act, 1961, read with the methods and documentation rules in the Income-tax Rules (Rule 10B and the Rule 10D family) and the penalty and interest machinery around them. This is the pillar guide: the complete framework — who is covered, what is covered, how it is priced, what must be documented, what it costs to get wrong, and who examines it. The companion guides go deep on each layer: the documentation rules, the safe harbours, the TDS on the payments, the ETP side, and the MAP/DTA resolution of the adjustments.

The framework, in one map

Section 92 (the Act)
├── 92(1)   arm's length pricing for international + specified domestic transactions
├── 92(2)   definitions: international transaction, specified domestic
│           transaction, associated person, arm's length price
├── 92(3)   thin capitalization — the interest deduction cap
├── 92A–92C the TPO's jurisdiction and procedure (92C: the determination)
├── 92AA    advance rulings on TP methods (the AAR)
├── 92CB    the safe harbour rules (Rule 10TA–10TE)
└── 92D     the expert report mechanism in the proceeding

Rule 10B (the Rules)        the methods: CUP, resale price, cost plus,
                            UCPM, TNMM, profit split, any other method

Rule 10D / 10DA             the documentation: Local File (10D), Master
                            File (10DA) — prepared, maintained, produced

CbCR rules (Action 13)      the country-by-country report (₹1,000 cr groups)

Section 271AA               the penalty: 10% of the underpayment
Sections 234A / 234B        the interest on the adjustment
Section 282BC               the production of the contemporaneous documentation

Who and what is covered

The transactions. Section 92(1) applies to two classes:

• International transactions — a transaction between two or more associated persons (one of them a non-resident), where the aggregate value of the transaction in the year exceeds ₹30 million, or does not exceed ₹30 million but exceeds 10% of the total value of all such transactions between the persons in the year.
• Specified domestic transactions — a transaction between associated persons (both resident) of the same kind, on the same ₹30 million / 10% test.

The associated person test (section 92(2)): the persons are associated where one has 26% or more of the voting power (directly or indirectly, alone or with associates) in the other, or participates in the other’s management, or controls the supply of funds, assets or goods to the other. The 26% threshold (raised from 20%) is the bright line the structure analysis runs on — and the “control” and “management” limbs keep the test wider than the pure shareholding.

The price. The arm’s length price is determined under the methods in Rule 10B, in the order listed: the comparable uncontrolled price, the resale price, the cost plus, the uncontrolled commodity price, the transactional net margin method (TNMM), the profit split, and any other method as prescribed. The best method is the one that gives the most reliable arm’s length result with the most dependable data and the least adjustment — see the methods overview and how to choose.

The documentation tiers

Tier	The rule	The threshold	The obligation
Local File	Rule 10D	Aggregate value of the international + specified domestic transactions above ₹300 million in the year	Prepared within 30 days of the FY end (by 31 May), maintained for 8 years, produced on the 282BC notice
Master File	Rule 10DA	₹1,000 crore aggregate group revenue (preceding FY)	Maintained by the relevant entity (head office in India, or the topmost Indian entity), produced on request
CbCR	The Action 13 rules	₹1,000 crore consolidated group revenue	Filed — Form 3CEB (where prepared in India) / Form 3CEBA (the constituent entity’s statement) — with the return

See the Local File guide, the Master File guide, the CbCR guide and the compliance calendar for the content, the deadlines and the sequence.

The penalty and interest

Consequence	The provision	The amount
The penalty	Section 271AA	10% of the underpayment of tax resulting from the TP adjustment — where the documentation was not prepared, the return is not in accordance with it, or it is inaccurate/incomplete. Blocked where the contemporaneous documentation is produced within the 282BC window
The interest	Sections 234A / 234B	1% or 1.5% per month on the adjustment’s tax, per the filing position (the return filed / not filed by the due date when the TPO determination is incorporated)
The adjustment itself	The TPO’s determination under 92C	The arm’s length price recomputed on the TPO’s method and pool — the tax consequence of the price difference

The sequence in an examination is the map in the TP audit defense guide: the 282BC notice, the production, the TPO’s examination and determination, the AO’s incorporation, the appeals.

The safe harbours

The section 92CB regime (Rules 10TA–10TE) is the certainty instrument: for the eligible transactions — software and ITeS services, KPO, contract R&D, intra-group loans, corporate guarantees, low-value-adding services, core auto components — the declared price at the prescribed circumstances is accepted, without the comparables fight, on the Form 3CEFA election. The current circumstances (amended through the 2025 notification) are in the safe harbour guide — and the jurisdiction-specific mechanics of the earlier 10AA/10AB service harbours in Rule 10AA & 10AB.

The TPO

The Transfer Pricing Officer (section 92C) is the officer with jurisdiction over the arm’s length price — the designated officer (the Chief Commissioner or above, as notified) who examines the documentation, hears the parties, receives the expert reports, and passes the determination that the Assessing Officer incorporates into the assessment. The TPO’s adjustment theories — method substitution, pool substitution, the tested- party challenge, the add-on — are catalogued in the audit defense guide, and the AAR (section 92AA) is the planning tool that fixes the method for future years before the years are filed.

The working position for an Indian taxpayer

1. The scope check — the associated persons, the transaction values, the ₹30 million / 10% test, year by year.
2. The method and the study — per transaction type: the method, the PLI, the pool, the range — run on the year’s actuals before 31 May.
3. The safe harbour decision — where the transaction is eligible: the benchmark result vs the prescribed margin, and the election (Form 3CEFA) made knowing both.
4. The documentation — the Local File (and the Master File / CbCR where the group’s thresholds are met), prepared in the window, reconciled across the tiers, retained for eight years.
5. The return in accordance — the TP position in the return matching the documentation, before the 271AA question even arises.
6. The TDS on the payments — the withholding on the interest, the royalty and the service fees, per the TDS guide.

The framework is unforgiving in the details — the dates, the definitions, the thresholds — and generous in the architecture: a taxpayer who runs the study on time, documents it properly and prices it within the range is a taxpayer the regime is designed to let pass.

See also

• Rule 10D & 10DA deep dive
• Safe harbours (Rule 10TD)
• TDS on TP payments
• The compliance calendar
• TP audit defense