Transfer pricing audit

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Querist : Anonymous

Querist : Anonymous (Querist)

03 July 2014 Can anybody tell me that what is TP and from which date it is applicable.

And

Also be confirmed that if i do sale to associate concerns above 5 crore in one and next year I could not maintain sale upto 5 crore. Then it will be applicable or not.

Querist : Anonymous

Querist : Anonymous (Querist)

09 July 2014 no body known answer above said question

Aashok Kumar Sharma

Aashok Kumar Sharma

(Expert)

02 August 2025 Great question — let's break it down into clear parts:

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## ✅ **1. What is Transfer Pricing (TP)?**

**Transfer Pricing (TP)** refers to the pricing of transactions between **Associated Enterprises (AEs)** — which are related parties — involving:

* Purchase or sale of goods
* Provision of services
* Loans or advances
* Use of intangibles, etc.

TP rules ensure that such transactions are done at **Arm's Length Price (ALP)** — i.e., the price that would have been charged between unrelated parties in similar circumstances.

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## 📅 **2. From Which Date Is Transfer Pricing Applicable in India?**

| Type of TP | Applicable From | Section |
| ----------------------------------------- | ------------------------------------- | --------------------------------------------- |
| **International Transactions** | **01 April 2002** (AY 2002–03 onward) | Sections 92 to 92F |
| **Specified Domestic Transactions (SDT)** | **01 April 2013** (AY 2013–14 onward) | Section 92BA (introduced in Finance Act 2012) |

> 📌 Note: Most SDT provisions were **withdrawn from AY 2018–19 onward**, except for few cases like profit-linked deduction undertakings.

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## ✅ **3. If I Sell to AEs Over ₹5 Crore in One Year and Not in the Next — Is TP Audit Still Applicable?**

### Let's clarify by **type of transaction**:

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### 🔸 **A. For International Transactions**

* TP audit under **Section 92E** is **mandatory** if **aggregate value of international transactions exceeds ₹1 crore** in a financial year.

✅ So:

* **Year 1**: Sale to AE = ₹5 crore → TP audit **applicable**
* **Year 2**: Sale to AE = ₹ TP audit is year-specific — if the **value is below threshold**, no TP audit is required for that year.

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### 🔸 **B. For Specified Domestic Transactions (SDT)** (Only applicable for some earlier years like FY 2012–13 to FY 2016–17)

* TP audit applicable **if aggregate SDT exceeds ₹5 crore (₹20 crore from AY 2016–17)**.

So:

* **FY 2012–13 or 2013–14**: Sales > ₹5 crore → TP audit applies
* **Next year, if sales 🔁 **TP audit is not continuous** — it applies **only in years** when your transactions **cross the prescribed thresholds**.

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Would you like a one-page **TP applicability flowchart** or a **TP audit checklist** for your business?

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