Transfer Pricing Audit

Transfer Pricing Audit

Under Sections 92A to 92F of the Income Tax Act, 1961, any company involved in specified domestic or international transactions with related parties must comply with transfer pricing regulations by filing Form 3CEB. This form must be certified by a Chartered Accountant who is independent and qualified to audit such transactions.

Let’s understand its relevance, due dates, and the filing procedure in detail.

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What Is Transfer Pricing?

Transfer pricing refers to the value assigned to transactions of goods or services between two related entities or divisions within an organization. Form 3CEB serves as evidence that these internal dealings are conducted at arm’s length prices, reflecting market value. It helps the Income Tax Department ensure there’s no manipulation in pricing to evade taxes or shift profits unfairly.

Form 3CEB: Due Date, Applicability & Online Filing Process for AY 2024–25

📅 Form 3CEB Due Date for AY 2024–25

For Assessment Year 2024–25, the deadline to submit Form 3CEB under Section 92E of the Income Tax Act is 31st October 2024.

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✅ Who Needs to File Form 3CEB?

Form 3CEB must be filed by businesses that:

• Enter into international transactions with associated enterprises (regardless of value)
  
  

• Conduct specified domestic transactions exceeding ₹20 crore during the financial year
  
  

This filing requires a detailed audit and certification from an independent Chartered Accountant, confirming the nature and fairness of the transactions.

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💼 Understanding Transfer Pricing Under Form 3CEB

Transfer pricing refers to the value set for goods or services exchanged between related entities. The form is crucial for two specific categories:

1. International Transactions: Between two or more associated entities, at least one of which is located outside India.
   
   

2. Specified Domestic Transactions: Where pricing arrangements must still meet arm's-length standards, though no foreign entity is involved.
   
   

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🌐 How to File Form 3CEB Online: Step-by-Step Guide

Step 1: Engage a registered Chartered Accountant (CA) to audit your transactions. After logging in to the income tax portal, go to the 'Authorised Partners' section and select 'My Chartered Accountant'.

Step 2: Navigate to e-File > Income Tax Forms > File Income Tax Forms, and select Form 3CEB. Assign it to your CA by entering their name, the assessment year, and type of filing.

Step 3: Once assigned, the CA will receive the request under their ‘For Your Action’ tab. They can accept or reject the assignment.

Step 4: If accepted, the CA will review the data, fill the form, and submit it for your approval.

Step 5: As the taxpayer, you’ll see the form under 'Pending for Acceptance'. Review and approve it to complete the filing process.

Form 3CEB – Income Tax Act: PDF Format & Structure Overview

You can access Form 3CEB in PDF format directly from the official Income Tax India website. The form is divided into three primary sections — Part A, Part B, and Part C, each covering specific transaction types and reporting requirements.

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🧾 Breakdown of Form 3CEB Sections

Part A: Basic Company Details

This initial section captures general information about the taxpayer, including:

• Name of the business
  
  

• PAN details
  
  

• Assessment year
  
  

• Nature of the business
  
  

Part B: International Transactions

Part B focuses on all international dealings with associated enterprises, and requires:

• Details of foreign affiliates
  
  

• Transactions in tangible/intangible property
  
  

• Information on borrowings, lending, or services
  
  

• Guarantees extended to foreign entities
  
  

• Transactions involving shares, debentures, or other securities
  
  

Part C: Specified Domestic Transactions

This section exclusively addresses domestic transactions between related parties that fall under transfer pricing provisions, particularly if the total value exceeds prescribed limits (₹20 crore in a financial year). It requires:

• Names of domestic associated enterprises
  
  

• Nature and value of transactions
  
  

• Supporting information justifying arm’s-length pricing
  
  

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🧾 Final Word

Companies involved in international or large domestic related-party transactions must file Form 3CEB under Section 92E of the Income Tax Act. It ensures compliance with transfer pricing rules and promotes transparency. Non-compliance may lead to significant penalties, so it’s crucial to ensure proper documentation and timely submission with the help of a qualified Chartered Accountant.