🔍 What is a Transfer Pricing Study?

A Transfer Pricing Study evaluates how related companies (within a group) price transactions between themselves—such as goods, services, royalties, or loans—to ensure they follow the arm’s length principle. This means the pricing should be similar to what unrelated parties would charge in open market conditions.

🧾 Why is a Transfer Pricing Study Important?

• • Ensures compliance with Indian and global transfer pricing regulations
  • Helps justify the chosen pricing methodologywith proper documentation
  • Prepares the business to face tax auditsconfidently and avoid hefty penalties (up to 40%)
  • Supports financial auditors with clarity on tax positions
  • Minimizes tax risks related to profit shifting to low-tax jurisdictions

🔍 Key Components of a Transfer Pricing Study

• • FAR Analysis– Assessment based on Functions performed, Assets used, and Risks assumed
  • Benchmarking– Comparing with similar independent transactions in the market
  • Transfer Pricing Methods– Applying suitable methods (CUP, TNMM, RPM, etc.)
  • Documentation– Building strong, audit-ready reports like Form 3CEB in India

🌍 Why It Matters for Indian Businesses

Following India's economic liberalization in 1991, FDI and cross-border operations grew significantly. With Indian companies expanding globally, transfer pricing compliance has become a core part of tax strategy and regulatory planning.

✅ Stay Prepared, Stay Compliant

While you can't always avoid a transfer pricing audit, being prepared with a solid study report can reduce risk and penalties. Timely and accurate filing can keep your business safe and stress-free during scrutiny.

📧 Have questions about Transfer Pricing Study Reports?
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