Direct Tax Laws & International Taxation · Transfer Pricing

Transfer Pricing Documentation, Accountant's Report and CbCR

Updated 5 October 2026

Transfer pricing documentation is the proof that your related-party prices are at arm's length. You maintain prescribed records, get an accountant's report on international transactions and specified domestic transactions, and, if group size crosses the limits, file a master file and a country-by-country report. Solve questions by testing each threshold in turn.

Understand Documentation, Accountant's Report and Country-by-Country Reporting

Transfer pricing rules only work if the tax department can check your prices. Documentation gives it that evidence. The law asks for three layers, each with its own trigger.

Layer 1 is the local file: information and documents on each international transaction and specified domestic transaction. You keep them to show how you arrived at the arm's length price. For international transactions, detailed documentation is needed when their aggregate value is more than ₹1 crore (the Rule 10D(2) exemption applies where it is not more than ₹1 crore). For specified domestic transactions, detailed documentation is needed when their aggregate value exceeds ₹20 crore (Rule 10D read with section 92BA). Below these limits, the detailed records are not mandatory. Your own records are not filed with the return. You produce them when asked.

Layer 2 is the accountant's report. An accountant must examine your records and certify particulars in the prescribed form (Form 3CEB). It is required if you entered into any international transaction in the tax year, with no value limit. For specified domestic transactions it is required only where their aggregate value exceeds ₹20 crore. You must file it on or before the date one month before the due date of the return under section 139(1). For cases that require transfer pricing reporting, that due date is 30 November, so the report is due by 31 October. The accountant is a chartered accountant. You, as the taxpayer, are responsible for obtaining and filing it.

Layer 3 is group-level reporting, based on OECD BEPS Action 13. The master file (Form 3CEAA, with Form 3CEAB for intimation of the designated entity) gives a global picture of the group. Part A of Form 3CEAA (basic details) is required of every constituent entity of an international group. Part B (the detailed group information) is required only if the revenue and transaction conditions are met. The country-by-country report (Form 3CEAD) shows revenue, profit, tax and employees for each country. Only large groups must give it.

A CbCR is filed by the Indian parent, or by an alternate reporting entity. If the parent is outside India, the Indian constituent entity must notify the tax authority who reports (Form 3CEAC). It must file the report itself where the parent's jurisdiction has no agreement with India for exchange of the report, has a systemic failure, or the parent has not furnished the report. Treat the figures below as the standard Rules position and confirm against the ICAI material for tax year 2026-27, since the Income-tax Rules, 2026 re-number the forms.

Key rules to remember

Detailed documentation trigger: International transactions: aggregate value > ₹1 crore (Rule 10D(2) exempts where it is not more than ₹1 crore). Specified domestic transactions: aggregate value > ₹20 crore; If the aggregate value of international transactions is not more than ₹1 crore, detailed records of those transactions are not mandatory. Specified domestic transactions need detailed documentation only when their aggregate value exceeds ₹20 crore. The same ₹20 crore figure is also the trigger for the accountant's report on them.
Accountant's report (Form 3CEB): Any international transaction (no value limit), or specified domestic transactions with aggregate value > ₹20 crore → report from an accountant; No value threshold for international transactions. For specified domestic transactions, the aggregate must exceed ₹20 crore. Due on or before the date one month before the due date of the return under section 139(1), that is 31 October for cases requiring transfer pricing reporting.
Master file applicability (Form 3CEAA): Part A: every constituent entity of an international group (no revenue or transaction test). Part B: group consolidated revenue > ₹500 crore AND (aggregate international transactions > ₹50 crore OR intangible-related transactions > ₹10 crore); For Part B, the revenue limit must be met and so must at least one of the two transaction limits. Group revenue is not tested for Part A.
Master file due date: Form 3CEAA: by 30 November following the tax year; Form 3CEAB intimation: at least 30 days before the Form 3CEAA due date (by 31 October when that date is 30 November); These are the long-standing dates under the Rules. Form 3CEAB is not due on the same date as Form 3CEAA. Confirm them against the ICAI material for tax year 2026-27, since the Income-tax Rules, 2026 re-number the forms.
CbCR applicability (Form 3CEAD): Indian parent: consolidated group revenue in the accounting year preceding the reporting accounting year exceeds ₹6,400 crore. Foreign parent: the amount equivalent to EUR 750 million in the parent's currency, as applied in the parent's jurisdiction; Filed by the Indian parent; due 12 months from the end of the reporting accounting year. The Indian constituent entity of a foreign group notifies the reporting entity in Form 3CEAC, which is due at least two months before the CbCR due date. Confirm the exact dates in the ICAI material.
Record retention: Keep documents for 9 years from the end of the relevant year; The long-standing Rules say nine years from the end of the relevant assessment year. Under the 2025 Act, read it as counted from the tax year.
Penalty for failure to maintain documents: May be levied at 2% of the value of each international transaction or specified domestic transaction (section 271AA of the long-standing Act); Leviable for failure to maintain or report a transaction, or for furnishing incorrect information or documents. It is not automatic: no penalty is levied if you show reasonable cause for the failure. Confirm the corresponding section number of the 2025 Act in the ICAI material.
Penalty for failure to furnish accountant's report: ₹1,00,000 (section 271BA of the long-standing Act); A lump sum penalty for failure to furnish the report, subject to the same reasonable-cause relief. CbCR and master file defaults carry separate daily penalties.

How to solve Documentation, Accountant's Report and Country-by-Country Reporting questions

Treat every question as a series of tests. Each document has its own trigger, so never assume one satisfies another.

1List the transactions. Separate international transactions from specified domestic transactions and note their aggregate value.
2Test the accountant's report. Any international transaction needs a report, whatever the value. Specified domestic transactions need one only if their aggregate value exceeds ₹20 crore.
3Test detailed documentation. For international transactions, compare the aggregate value with ₹1 crore. For specified domestic transactions, compare the aggregate value with ₹20 crore. Documentation is needed only where the limit is exceeded.
4Test the master file. Part A applies to every constituent entity of an international group. For Part B, check group revenue above ₹500 crore and then either international transactions above ₹50 crore or intangible-related transactions above ₹10 crore.
5Test CbCR. Check whether the group consolidated revenue in the preceding accounting year exceeds the limit: ₹6,400 crore for an Indian parent, or the equivalent of EUR 750 million for a foreign parent. Then identify who the parent is and who must file or notify.
6Note the due dates and the form for each requirement that applies.
7Apply the penalty for each default separately, noting that it may be levied and that reasonable cause can relieve it, then state the conclusion.

Quickest way: Four-gate check

When to use it: Use it for MCQs and short scenario questions where you must say what the entity has to do.

Gate 1: any international transaction, or specified domestic transactions above ₹20 crore in aggregate? If yes, the accountant's report is needed.
Gate 2: international transactions above ₹1 crore, or specified domestic transactions above ₹20 crore? If yes for either, keep detailed documents for that class of transaction.
Gate 3: master file. Part A applies to every constituent entity of an international group. Part B applies only if group revenue is above ₹500 crore and either international transactions are above ₹50 crore or intangibles are above ₹10 crore.
Gate 4: group revenue above the CbCR limit in the preceding accounting year (above ₹6,400 crore for an Indian parent; the equivalent of EUR 750 million for a foreign parent)? If yes, CbCR applies. Then identify the parent or alternate reporting entity.
Match each failure to its penalty and write the answer.

Common mistakes in Documentation, Accountant's Report and Country-by-Country Reporting

Saying the accountant's report is not needed because international transactions are under ₹1 crore.
Students mix the documentation limit with the reporting trigger.
Fix: For international transactions, the report depends on the existence of a transaction, not its value. The ₹1 crore limit applies only to detailed documentation. Specified domestic transactions trigger the report only if their aggregate exceeds ₹20 crore.
Applying master file Part B when only one of the two limbs is met.
Students remember ₹500 crore and ₹50 crore as alternatives.
Fix: The revenue limit (₹500 crore) is always needed. On top of it, you need either international transactions above ₹50 crore or intangible-related transactions above ₹10 crore.
Saying the master file does not apply at all when the thresholds are not met.
Students apply the Part B conditions to the whole of Form 3CEAA.
Fix: Part A is required of every constituent entity of an international group. The ₹500 crore and ₹50 crore (or ₹10 crore) conditions decide only whether Part B is needed.
Confusing master file revenue (₹500 crore) with CbCR revenue (₹6,400 crore).
Both are group-level reports with similar-looking figures.
Fix: Remember CbCR is for the largest groups only. ₹6,400 crore applies to an Indian parent. For a foreign parent, the test is the equivalent of EUR 750 million.
Assuming the foreign parent's CbCR relieves the Indian entity of all duties.
Students think that filing abroad ends the matter.
Fix: The Indian constituent entity must still notify who is reporting and, in specified cases, file the report itself.
Assuming the documents must be filed with the return.
Students link the accountant's report and the local file.
Fix: Only the report is filed. Documents are kept and produced on request.
Quoting a single penalty for all defaults.
The penalties sit in separate provisions.
Fix: Match each default: records (2% of transaction value may be levied, section 271AA), report (₹1,00,000, section 271BA), master file or CbCR (separate daily penalties). Mention reasonable-cause relief.

Worked examples

Example 1

Alpha Ltd is an Indian company in a multinational group. For the tax year, group consolidated revenue is ₹620 crore. Alpha's international transactions with associated enterprises total ₹42 crore, including ₹3 crore for use of intangible property. State which documentation obligations apply.

Show the solution

Alpha has international transactions, so an accountant's report (Form 3CEB) is required.
International transactions of ₹42 crore exceed ₹1 crore, so the Rule 10D(2) exemption does not apply and detailed documents must be kept.
Master file Part A: Alpha is a constituent entity of an international group, so Part A of Form 3CEAA is required. Group revenue is not tested for Part A.
Master file Part B: group revenue ₹620 crore exceeds ₹500 crore, so the revenue limb is met. International transactions of ₹42 crore do not exceed ₹50 crore, and intangible-related transactions of ₹3 crore do not exceed ₹10 crore. Neither transaction limit is met, so Part B is not required.
CbCR: group revenue of ₹620 crore is far below the CbCR limit (₹6,400 crore for an Indian parent, or about EUR 750 million for a foreign parent), so no CbCR applies.

Answer: Alpha must get the accountant's report, keep detailed documents, and file Part A of the master file. Part B of the master file and CbCR do not apply.

Example 2

Beta India Pvt Ltd is a subsidiary of a foreign group. The group's consolidated revenue in the accounting year preceding the reporting accounting year is EUR 900 million, and the parent's jurisdiction applies the limit of the equivalent of EUR 750 million. Beta has international transactions of ₹12 crore with associates and did not maintain the prescribed documents. It did file the accountant's report. What follows for CbCR and penalties?

Show the solution

Beta has international transactions, so it needed an accountant's report (Form 3CEB), due by 31 October. It filed it, so this duty is met. Its transactions of ₹12 crore exceed ₹1 crore, so detailed documents were also required.
The parent is foreign, so the test is the equivalent of EUR 750 million in the parent's jurisdiction, not ₹6,400 crore. Group revenue of EUR 900 million is above EUR 750 million, so the group is subject to CbCR.
The parent is outside India, so Beta, as an Indian constituent entity, must notify the tax authority in Form 3CEAC which entity will file the report for the group. This is due at least two months before the CbCR due date. Confirm the exact date in the ICAI material.
Beta must itself file the report if the parent's jurisdiction has no agreement with India for exchange of the report, has a systemic failure, or the parent has not furnished the report.
Documents were not maintained. A penalty under section 271AA may be levied at 2% of the value of the transaction: 2% × ₹12 crore = ₹24 lakh. It will not be levied if Beta shows reasonable cause for the failure.
The accountant's report was filed, so the ₹1,00,000 penalty under section 271BA does not apply.

Answer: CbCR applies to the group and Beta must notify who reports (and file itself in the cases above). Beta is liable to a penalty of up to ₹24 lakh (2% × ₹12 crore) for not maintaining documents, unless it proves reasonable cause, and faces no penalty for the accountant's report.

Exam tips

Write the four tests in order, with the figure for each, before concluding. Examiners award marks for each test.
Learn the thresholds as a table: ₹1 crore (international transactions), ₹20 crore (aggregate of specified domestic transactions, for both documentation and the accountant's report), ₹500 crore with ₹50 crore or ₹10 crore for intangibles, and ₹6,400 crore (Indian parent) or EUR 750 million equivalent (foreign parent).
Remember that master file Part A is not threshold-based. Only Part B is.
For penalty questions, compute 2% of the transaction value, show the working, and say the penalty may be levied subject to reasonable cause.
Use the 2025 Act's terms such as tax year, and avoid the 1961 Act terms like assessment year. Confirm the thresholds, due dates (including Forms 3CEAA, 3CEAB and 3CEAC) and penalty section numbers against the ICAI material supplied for tax year 2026-27.

Practice questions from Transfer Pricing

Documentation, Accountant's Report and Country-by-Country Reporting: frequently asked questions

Who files the accountant's report in transfer pricing?

You, the taxpayer, file it if you have any international transaction, or specified domestic transactions with an aggregate value above ₹20 crore. It is prepared by an accountant (a chartered accountant) in the prescribed form (Form 3CEB). It is due on or before the date one month before the section 139(1) due date of the return, that is 31 October for cases requiring transfer pricing reporting.

What is the threshold for the master file?

Part A of Form 3CEAA is required of every constituent entity of an international group. Part B applies if group consolidated revenue exceeds ₹500 crore and either the aggregate of international transactions exceeds ₹50 crore or intangible-related transactions exceed ₹10 crore.

Who must file the country-by-country report?

The Indian parent of a group with consolidated revenue above ₹6,400 crore in the preceding accounting year files it. For a group with a foreign parent, the test is the equivalent of EUR 750 million in the parent's currency. If the parent is abroad, the Indian entity must notify who reports. It must file itself where the parent's jurisdiction has no exchange agreement with India, has a systemic failure, or the parent has not furnished the report.

What is the penalty for not maintaining transfer pricing documents?

A penalty of 2% of the value of each international transaction or specified domestic transaction concerned may be levied (section 271AA of the long-standing Act). It is not levied if you show reasonable cause. Failing to furnish the accountant's report carries a separate penalty of ₹1,00,000 (section 271BA).