Transfer pricing documentation is a critical compliance requirement for taxpayers entering into international transactions or specified domestic transactions. Rule 84 of the Income Tax Rules, 2026 specifies the information and documents that must be maintained. Understanding these requirements is essential for taxpayers and practitioners.
The Statutory Framework
Section 171: Maintenance of Information and Documents
Section 171 requires every person who has entered into an international transaction or specified domestic transaction to keep and maintain such information and document in respect thereof and for such period and in such manner, as may be prescribed.
Rule 84: Information and Documents
Rule 84 specifies the information and documents to be maintained.
Complete Documentation Checklist
1. Ownership Structure
Required Information:
- Description of the ownership structure of the assessee enterprise
- Details of shares or other ownership interest held therein by other enterprises
- For the contemporaneous period
2. Group Profile
Required Information:
- Profile of the multinational group
- Name, address, legal status, and country of tax residence of each enterprise comprised in the group
- Ownership linkages among them
3. Business Description
Required Information:
- Broad description of the business of the assessee
- Description of the industry in which the assessee operates
- Description of the business of the associated enterprises with whom the assessee has transacted
4. Transaction Details
Required Information:
- Nature and terms (including prices) of international transaction or specified domestic transaction
- Details of property transferred or services provided
- Quantum and the value of each such transaction or class of such transaction
5. Functional Analysis
Required Information:
- Description of the functions performed
- Risks assumed
- Assets employed or to be employed by the assessee and by the associated enterprises
6. Economic Analysis
Required Information:
- Record of economic and market analyses
- Forecasts, budgets, or any other financial estimates
- Prepared by the assessee for the business as a whole and for each division or product separately
7. Comparability Analysis
Required Information:
- Record of uncontrolled transactions taken into account for analysing comparability
- Nature, terms, and conditions relating to any uncontrolled transaction
- Analysis performed to evaluate comparability
8. Method Selection
Required Information:
- Description of the methods considered for determining the arm's length price
- Method selected as the most appropriate method along with explanations
- How such method was applied in each case
9. Working and Adjustments
Required Information:
- Record of the actual working carried out for determining the arm's length price
- Details of the comparable data and financial information used
- Adjustments, if any, which were made
10. Assumptions and Policies
Required Information:
- Assumptions, policies, and price negotiations
- Which have critically affected the determination of the arm's length price
11. Adjustments Made
Required Information:
- Details of the adjustments, if any, made to transfer prices
- Consequent adjustment made to the total income for tax purposes
12. Other Relevant Information
Required Information:
- Any other information, data, or document
- Including information or data relating to the associated enterprise
- Which may be relevant for determination of the arm's length price
Supporting Documents
Types of Supporting Documents
Official Publications: Publications from the Government of the country of residence of the associated enterprise
Market Research Reports: Reports of market research studies carried out and technical publications
Price Publications: Price publications including stock exchange and commodity market quotations
Financial Statements: Published accounts and financial statements relating to the business affairs of the associated enterprises
Agreements and Contracts: Agreements and contracts entered into with associated enterprises or with unrelated enterprises
Correspondence: Letters, e-mails, and other correspondence documenting terms negotiated
Accounting Documents: Documents generally issued in connection with various transactions under the accounting practices followed
Exclusions
Aggregate Value Threshold
The documentation requirements do not apply to an international transaction in a case where the aggregate value, as recorded in the books of account, of international transactions entered into by the assessee during the tax year does not exceed Rs. 1 crore.
Simplified Documentation for Specified Domestic Transactions
For specified domestic transactions, simplified documentation requirements apply for eligible assessees.
Retention Period
General Retention Period
The information and documents shall be kept and maintained for a period of nine years from the end of the relevant tax year.
Continued Relevance
Where a relevant transaction continues to have effect beyond one tax year, fresh documentation need not be maintained separately in respect of each tax year, unless there is any significant change.
Expert Legal Guidance
Understanding the transfer pricing documentation requirements is essential for taxpayers with international transactions. Anuj Desai & Associates provides expert advisory services on Direct Tax Code compliance, helping taxpayers maintain complete documentation and ensure compliance with transfer pricing requirements.
Disclaimer: This article provides general information and does not constitute legal advice. For specific guidance on your Direct Tax Code compliance or any other tax matter, please consult qualified legal professionals.
Need Expert Legal Guidance?
Navigating the complex Direct Tax Code framework requires experienced legal counsel. At Anuj Desai & Associates, we provide comprehensive legal advisory services on Direct Tax Code compliance, including:
- Transfer Pricing Advisory: Guidance on arm's length price determination, method selection, and documentation
- Tax Compliance: Assistance with tax returns, audits, and reporting
- International Taxation: Advisory on double taxation relief, foreign tax credit, and DTAA claims
- Representation: Before tax authorities and appellate bodies
Contact us for expert legal guidance on your Direct Tax Code compliance needs.