FAQ: International Tax India
Answers on India market entry, FDI, GCC setup, tax, and compliance.
International Tax & Transfer Pricing Services in India for Foreign Companies
What transfer pricing documentation is mandatory for an India subsidiary transacting with its foreign parent?
An India subsidiary with related-party international transactions must maintain contemporaneous TP documentation and file Form 3CEB annually; above certain revenue and transaction-value thresholds, it also needs a Master File and, if the group meets the consolidated revenue threshold, Country-by-Country Reporting. Read full answer →
What is an Advance Pricing Agreement and should our India subsidiary apply for one?
An Advance Pricing Agreement (APA) is a multi-year agreement with India's tax authority that fixes the transfer pricing method for specified related-party transactions in advance, giving certainty and removing annual TP audit risk for those transactions — it's worth pursuing for high-value, recurring intercompany transactions where litigation risk or valuation complexity is high. Read full answer →
How is the arm's length price determined for transactions with our India subsidiary, and what happens if it's challenged?
India's transfer pricing rules require related-party transactions to be priced using one of six prescribed methods (CUP, resale price, cost plus, TNMM, profit split, or another method), benchmarked against comparable independent companies; if a tax officer disagrees with the benchmarking during a TP audit, they can make an adjustment that increases taxable income and triggers penalties. Read full answer →
What are transfer pricing safe harbour rules and does our India subsidiary qualify?
India's safe harbour rules let eligible taxpayers — mainly IT/ITeS, KPO, and contract R&D units — declare a pre-agreed minimum operating margin on related-party transactions and have it automatically accepted without a transfer pricing audit, provided the transaction category and value fall within the notified thresholds. Read full answer →
Can foreign employees visiting India on business trips create a Permanent Establishment risk?
Yes — if foreign employees regularly visit India and habitually conclude contracts, negotiate key terms, or work from a fixed place on the parent's behalf, tax authorities can assert a dependent agent or fixed-place Permanent Establishment, exposing the foreign company's India-linked profits to Indian tax. Read full answer →