What transfer pricing covers.
Transfer pricing rules make sure profits are not shifted out of India through intercompany pricing. Any international transaction between associated enterprises, such as a UK parent and its Indian subsidiary or branch, must be priced as unrelated parties would price it.
The rules are in the Income-tax Act, 2025, which replaced the 1961 Act from 1 April 2026. See Transfer Pricing Laws for the legal background.
Software and IT services
Indian subsidiaries providing development or support services to the UK group.
Management and shared services
UK head office charges for HR, finance, IT and leadership.
Royalties and brand fees
Payments for the use of UK intellectual property or trade marks.
Loans and guarantees
Intercompany loans, interest rates and corporate guarantees.
Methods and benchmarking.
The arm's length price is set using one of the prescribed methods. For most Indian service subsidiaries, the transactional net margin method is used, comparing the subsidiary's profit margin with independent Indian companies doing similar work. See Benchmarking Analysis.
| Method | Often used for |
|---|---|
| Transactional net margin method | Captive IT, back-office and engineering service providers |
| Comparable uncontrolled price | Interest on loans, commodity sales |
| Cost plus method | Contract manufacturing, simple services |
| Resale price method | Distributors buying from the UK group |
| Profit split method | Highly integrated operations with unique contributions |
Documentation and annual reports.
| Requirement | Who | When |
|---|---|---|
| Accountant's report | All entities with international transactions | Form 48 (was 3CEB) by 31 October |
| Local file documentation | International transactions above ₹1 crore in the year | Kept by the report date |
| Master file | Larger groups above the thresholds | Form 56 (was 3CEAA) |
| Country-by-country report | Groups with revenue above the CbCR threshold | Usually filed by the UK parent with HMRC |
| Income tax return | The Indian entity | By 30 November in transfer pricing cases |
See Transfer Pricing Documentation and Transfer Pricing Study.
Keeping India and the UK aligned.
HMRC applies its own transfer pricing rules to the UK side of the same transactions. A price that suits India but not the UK can lead to double taxation. We align the Indian documentation with your group policy and UK advisers, and where disputes arise, the India–UK tax treaty offers the mutual agreement procedure.
For some services, India offers safe harbour margins that, if accepted, reduce disputes.
Unilateral or bilateral APAs with India and the UK can fix the method for several years.
We handle assessments and appeals if an adjustment is made.
How we handle your transfer pricing.
Identify every transaction
From the ledgers and intercompany agreements.
Functions, assets and risks
Interviews with the Indian and UK teams.
Search for comparables
Using Indian databases and the right method.
Prepare the local file
And review intercompany agreements and invoices.
Form 48 and the return
Our Chartered Accountant certifies the report by 31 October.
Risks of weak transfer pricing.
The officer can increase Indian taxable income to the arm's length level.
Separate penalties apply for missing documentation and late or missing reports.
Without alignment, the same profit can be taxed in both countries.
Why UK companies choose us in India.
We work with your UK finance team, lawyers and auditors, and translate Indian requirements into plain English.
Every filing and certificate is checked by a second Chartered Accountant before it goes in.
A written scope, timetable and fee before work starts.
One calendar of every MCA, RBI, GST and income-tax deadline for your Indian entity.
Set-up, accounts, payroll, tax, audit and RBI filings handled together.
Encrypted document sharing and digital signatures. Directors never need to travel.
Transfer pricing for UK groups across the country.
We work with individuals and businesses in every part of the UK, coordinating the Indian side of their tax with their UK advisers online.
London
South East
Midlands
North of England
East and South West
Scotland, Wales, NI
International transfer pricing FAQs.
Charging between your UK and Indian entities?
Tell us about your intercompany transactions. We will review the pricing and the documentation.
This page is general guidance based on Indian tax law, the India–UK tax treaty and related rules as they stand, including the Income-tax Act, 2025 that applies from 1 April 2026. We are Chartered Accountants in India; for UK tax returns we work alongside your UK accountant. This is not legal or financial advice for your situation, and rates and rules can change.