Transfer pricing audit

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Kapil Bhatia

Kapil Bhatia (Querist)
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18 April 2014 What is transfer pricicing audit.

CS,CA F,Numrologi TusharSampat

CS,CA F,Numrologi TusharSampat (Expert)
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18 April 2014 AS we have tax audit there is similar concept of transfer pricing audit which means all the section and rules for transfer pricing like sec 92-92D and other rules are followed or not?
if there is deviation whther int or penalty is paid or not ect.

Kapil Bhatia

Kapil Bhatia (Querist)
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21 June 2014 In FY 2012-2013 Purchases was Exceeding Rs 5 crore from my associate concerns and my company was covered under Transfer Pricing Audit.
But IN 2013-14 purchases from our associate concen is less than Rs.5 Crores. Should I Audit under Transfer pricing or not.

Aashok Kumar Sharma online

Aashok Kumar Sharma online

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02 August 2025 Great set of questions. Let’s walk through the answers clearly and concisely for you.

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## ✅ **1. What is Transfer Pricing Audit?**

A **Transfer Pricing (TP) Audit** under Indian tax law refers to:

> 🔎 A **special audit conducted by a Chartered Accountant (CA)** to verify whether **international or specified domestic transactions** between **associated enterprises (AEs)** are done at **arm’s length price (ALP)** — as required under **Sections 92 to 92F** of the Income Tax Act, 1961.

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### 📄 **Form 3CEB**:

* The audit is reported in **Form 3CEB**, filed along with the tax return.
* It includes:

* Details of international/SDT transactions,
* Method used to compute ALP,
* CA’s opinion on compliance.

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## ✅ **2. Are TP Provisions Still Applicable in FY 2013–14 If Purchases ₹5 crore** from your **associate concern**.
* ✅ If the associate concern qualifies as an **AE**, and the transaction was **international** or a **specified domestic transaction**, then **TP audit under Section 92E** was applicable.

### 📅 **FY 2013–14**:

* ❌ Purchases from AE were **less than ₹5 crore**.
* So, do TP audit requirements still apply?

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### ✅ **Answer: It Depends.**

### 🔸 If It's an **International Transaction**:

> ✅ **TP audit is required** if the value of **all international transactions with AEs** during the year **exceeds ₹1 crore (₹10 million)**.

So:

* If **total international transaction value TP audit is applicable **only if SDT exceeds ₹5 crore** in aggregate for FY 2013–14.

📌 From **FY 2016–17 onwards**, SDT threshold was raised to ₹20 crore.
📌 From **FY 2017–18**, most SDTs (like transactions between same tax rate entities) were removed from TP scope.

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## ✅ Summary Table:

| Condition | FY 2012–13 | FY 2013–14 |
| ----------------------------------- | ---------- | ----------------------------- |
| Purchases from AE | ₹5 Cr+ | < ₹5 Cr |
| Is it an International Transaction? | Yes | Yes? |
| Threshold for TP audit | ₹1 Cr | ₹1 Cr |
| Audit under Sec 92E needed? | Yes | ✅ Only if total value ≥ ₹1 Cr |

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## ✅ Practical Action:

👉 **Check total value** of international (or SDT) transactions with AEs in FY 2013–14.

* If it’s **less than ₹1 crore**, **no Form 3CEB required**.
* If **≥ ₹1 crore**, you must **get the TP audit done** and file **Form 3CEB**.

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