Doing business with a parent, subsidiary or other group company? Legal Startup drafts and reviews intercompany agreements that set clear, arm's length terms for services, loans, royalties and goods, and match them with your transfer pricing documentation.
Free call & custom quote · Quoted per agreement after reviewing your transactions
A transfer pricing agreement is a written contract between associated enterprises, such as a parent company and its subsidiary, that sets the terms and pricing of the transactions between them. In India, transactions with associated enterprises must be at arm's length, which means priced as if the parties were unrelated, and a clear intercompany agreement is the first piece of evidence supporting that position.
Last updated: October 2026. Transfer pricing rules, thresholds, forms and due dates can change, and the income tax law was revised for periods from April 2026, so we confirm the current position before drafting. This page is general information, not tax advice.
When two group companies deal with each other, they can set any price they like, and that price affects how profit is split between countries or entities. Transfer pricing rules exist to make sure the profit reported in India reflects a fair, market-based price. A transfer pricing agreement, also called an intercompany agreement, records what each party will do, what it will be paid and how that price is calculated.
In India the rules apply to international transactions between associated enterprises and to certain specified domestic transactions. The tax authority checks whether the price is at arm's length using prescribed methods and comparable data. A written agreement does not fix the price on its own, but it shows the commercial substance of the arrangement: who provides what, who bears which risk and how the charge is worked out.
The agreement needs to match reality. If the contract says one thing and the parties do another, it can weaken your position during an assessment. We draft the agreement with your tax advisor's pricing approach so that the legal terms, the invoices and the transfer pricing documentation tell the same story. For the law and forms, visit the Income Tax Department of India website.
Important points for related-party transactions in India. Thresholds can change.
The terms depend on what is exchanged between the group companies.
Management, IT, HR, finance or support services between entities.
Intercompany loans, advances and corporate guarantees.
Use of brands, technology, software or know-how within the group.
Supply, distribution or contract manufacturing between related entities.
Shared costs and expenses paid on behalf of another group entity.
Certain transactions between related persons within India.
Not sure whether your arrangement needs an agreement or what it should say? Share the details and our team will point out what to document.
Why groups document their related-party arrangements.
Clear terms show the commercial basis of the price during an assessment.
The agreement records who does what and who bears which risk.
Consistent contracts, invoices and documentation reduce questions from tax officers.
The legal terms match the functional analysis and benchmarking study.
Each party knows its obligations, payment terms and review process.
Investors, lenders and acquirers expect related-party dealings to be documented.
Price adjustment clauses let the parties correct pricing if a later review requires it.
From understanding your transactions to a signed, aligned agreement.
Timelines depend on the number of entities and transactions and how quickly your advisor confirms the pricing approach. Not to scale.
We list the associated enterprises, their roles and each type of transaction, including existing contracts and invoices.
Your tax advisor or chartered accountant confirms the method and benchmarks. We turn that approach into precise contract wording.
The agreement covers scope, pricing, invoicing, term, termination, intellectual property, confidentiality, adjustment and dispute resolution.
The draft is reviewed by the Indian entity and its group counterpart, and changes are made until the terms reflect how the parties actually operate.
The agreement is signed by authorised signatories, stamped as required in the relevant state and preserved with the transfer pricing records.
Invoices, payments and documentation should follow the agreement. We flag when the terms need to be updated.
Keep these ready to avoid delays. Our expert will confirm the exact list for your case.
The cost of a transfer pricing agreement depends on the number of entities, the types of transactions and whether you need new drafting or a review of existing contracts. It generally has three parts:
Our fee is quoted per agreement or per set of agreements after a free call and a look at your transactions. Call free for a custom quote before you pay anything.
Stamp duty on agreements is set by each state and depends on the document. We confirm the position for the state where you sign.
The benchmarking study, transfer pricing documentation and Form 3CEB are handled by your chartered accountant or tax advisor and are charged separately by them.
We share a clear, itemised quote before you begin – no hidden charges. Get your free quote →
Choose the support that matches your group, or call free for a custom quote.
You have a related-party transaction and need a clear written agreement.
You already have agreements and want them checked against your pricing and documentation.
Several entities, several transaction types or a growing multinational structure.
Our professional fee is quoted after a free call. Stamp duty is a government charge paid separately, and tax advisory work is handled by your tax professional. Not sure which option fits? Ask for a free review.
Any business that deals with an associated enterprise should have its terms in writing.
Companies that pay or earn from a foreign parent or group entity.
Companies that have set up subsidiaries or branches abroad.
IT, finance and support centres serving group companies.
Flip structures where the parent sits outside India and the operations stay in India.
Related entities whose domestic dealings may fall under specified domestic transaction rules.
Businesses that want related-party arrangements properly recorded.
A quick view of how the agreement differs from other transfer pricing documents and filings.
| Document | What it does | Prepared by | Filed with authority? | Note |
|---|---|---|---|---|
| Intercompany (transfer pricing) agreement | Records terms and pricing between group entities | Lawyer with tax input | No | Kept in records, produced on request |
| Transfer pricing documentation | Shows the price is at arm's length | Tax advisor or chartered accountant | Maintained, produced on request | Threshold-based |
| Accountant's report (Form 3CEB) | Reports international and specified domestic transactions | Chartered accountant | Yes | Due date applies; confirm current form |
| Advance pricing agreement | Fixes the price or method in advance | Taxpayer with advisors | Yes, with the CBDT | Optional; fee and process apply |
Most disputes come from a gap between the contract and what the group actually does.
The agreement is the start. These steps keep your position consistent.
Store the executed agreement with your transfer pricing records.
Raise invoices and make payments exactly as the agreement says.
Your chartered accountant prepares the documentation and Form 3CEB where applicable.
Amend the agreement when scope, rates, entities or the pricing method change.
Need help with a related legal or business matter? Browse our other services from the Legal Startup home page or fill the form below.
Quick answers on transfer pricing agreements in India.
A transfer pricing agreement is a written contract between associated enterprises that sets out the terms and pricing of transactions between them, such as services, loans, royalties or the sale of goods. It records the commercial terms and supports the position that the price is at arm's length.
Indian law does not prescribe a standalone form called a transfer pricing agreement. However, tax authorities expect related-party transactions to be backed by written agreements, and the transfer pricing documentation requires details of contractual terms. In practice, a written intercompany agreement is strongly advised.
The arm's length principle means that a transaction between related parties should be priced as if the parties were unrelated and dealing independently. Indian transfer pricing rules test international transactions and specified domestic transactions against this standard.
Typically the parties and their relationship, a description of the services, goods or rights, the pricing method and formula, invoicing and payment terms, the term and termination, intellectual property and confidentiality, a clause for adjustment of prices, governing law and dispute resolution, and the documents the parties will maintain.
Common examples are intra-group services, management charges and cost reimbursements, intercompany loans and guarantees, royalty and technology licences, sale and purchase of goods, contract manufacturing and distribution arrangements. Any transaction with an associated enterprise may be reviewed.
Indian rules prescribe the comparable uncontrolled price method, resale price method, cost plus method, profit split method, transactional net margin method and any other method that is prescribed. The most appropriate method depends on the nature of the transaction and the data available.
Form 3CEB is the report from a chartered accountant on international transactions and specified domestic transactions. It is required where such transactions exist and must be filed within the prescribed due date. Form numbers and procedures may change under the revised income tax law, so confirm the current requirement.
Under the current rules, detailed documentation is generally required where the aggregate value of international transactions exceeds ₹1 crore in a year. Separate thresholds apply to specified domestic transactions, and larger groups may need master file and country-by-country reporting. Thresholds can change.
An advance pricing agreement, or APA, is an agreement between a taxpayer and the Central Board of Direct Taxes that fixes the arm's length price or method for specified international transactions for a set number of years. It can be unilateral, bilateral or multilateral, and gives certainty on future transactions.
Penalties can apply for failing to maintain documentation, failing to furnish the accountant's report, and for under-reported income arising from a transfer pricing adjustment. The amounts and conditions are set by the tax law, so it is safer to document transactions properly and on time.
It is best to sign the agreement before or when the transaction starts. A document signed later with retrospective effect may be questioned by tax authorities, especially if the actual conduct of the parties differs from the written terms. The agreement should reflect what the parties actually do.
Stamp duty on agreements is a state subject and depends on the nature of the document and where it is executed. Many commercial agreements attract stamp duty, so we check the position for the relevant state before the agreement is signed.
Dealing with group companies? Speak to our legal expert today – the review of your transactions and the quote are free.
Tell us what you need and our team will get back to you with the right guidance.
Legalstartup ke certificates, registrations aur recognitions jo hamari credibility dikhate hain.
"Explore how Legalstartup has helped businesses reach new heights as their trusted partner."
Thousands of businesses and founders trust LegalStartup.