In today’s globally connected business environment, smaller Indian companies as well as large multinational corporations frequently engage with their overseas associates or related entities. To ensure that such cross-border dealings—and certain important domestic transactions—are conducted at fair, arm’s-length prices, the Income Tax Act relies on Sections 92 to 92F.
At the center of these rules is Section 92E, which makes it mandatory for any taxpayer involved in international or specified domestic transactions during a financial year to file a Chartered Accountant’s report in Form 3CEB within the prescribed due date.
Missing this compliance requirement can result in substantial penalties and may even trigger deeper scrutiny from the tax department.
This guide provides all essential information for AY 2025–26 (FY 2024–25)—including eligibility, what constitutes a trigger transaction, important deadlines, penalties involved, and a simple compliance checklist to help you stay on track.
Section 92E of Income Tax
Section 92E says that if a person or company has done any international or specified domestic transaction with a related party during the year, they must get a report from a Chartered Accountant. In simple words, if your business has even one international or specified domestic transaction with a related party, you need to get a transfer pricing report prepared and file Form 3CEB. This form must be signed and certified by a Chartered Accountant before the due date.
Who is Required to File Form 3CEB?
The filing requirement applies to:
- Any “person” (individual, HUF, firm, AOP, company, etc.) who has entered into:
- An International Transaction [as defined u/s 92B], or
- A Specified Domestic Transaction [as defined u/s 92BA] (applicable only up to AY 2016-17; omitted w.e.f. AY 2017-18, but still relevant for pending assessments).
- Threshold Limit: There is no monetary threshold for triggering the filing of Form 3CEB. Even a transaction of ₹1 with an associated enterprise requires filing.
- Common Scenarios:
- Indian subsidiary paying royalty/management fees to foreign parent
- Indian company availing or providing loans to/from overseas group companies
- Purchase/sale of goods, provision of services, cost-sharing arrangements with AEs
- Corporate guarantees issued/received
- AMP (Advertisement, Marketing & Promotion) expenses incurred for foreign brand owner (considered an international transaction by many judicial precedents)
Note: From AY 2021-22 onwards, the Finance Act has expanded the scope of “international transaction” to include transactions between head office and permanent establishment (PE) as well as between two PEs of the same non-resident.
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Key Definitions You Must Know
| Term | Section | Brief Meaning |
|---|---|---|
| Associated Enterprise (AE) | 92A | Direct/indirect participation in management, control or capital; 26% voting power, common control, etc. |
| International Transaction | 92B | Transaction between two or more AEs, at least one of whom is a non-resident |
| Specified Domestic Transaction | 92BA | Was applicable up to AY 2016-17 (expenditure with related parties u/s 40A(2), etc.) |
| Arm’s Length Price (ALP) | 92F | Price applied in uncontrolled transaction between independent enterprises |
Due Date for Filing Form 3CEB for AY 2025-26
| Category of Assessee | Due Date for Form 3CEB (AY 2025-26) |
|---|---|
| Companies and others required to furnish TP report (where transfer pricing audit u/s 92E applies) | 30th November 2025 |
| Persons required to get books audited u/s 44AB (even if no international transaction) | 31st October 2025 (but if TP applies, extended to 30th Nov) |
| Non-corporate assessees not required to get tax audit | 31st July 2025 (but again, TP pushes it to 30th Nov) |
Important: The due date for filing the Income Tax Return (ITR) for persons required to furnish Form 3CEB is also 30th November 2025.
Penalties for Non-Compliance
The penalty provisions are stringent to ensure compliance:
| Nature of Default | Penalty Amount | Section |
|---|---|---|
| Failure to furnish Accountant’s Report (Form 3CEB) | ₹1,00,000 (fixed) | 271G |
| Failure to maintain prescribed TP documentation | 2% of the value of international transaction | 271AA |
| Failure to furnish information/documents during TP audit | 2% of the value of international transaction | 271G |
| Failure to report a transaction in Form 3CEB | ₹1,00,000 | 271BA |
| Failure to furnish Master File (if applicable) | ₹5,00,000 | 271GB |
| Failure to furnish CbCR (Country-by-Country Report) | Up to ₹50 lakhs (graded) | 286 |
In practice, the most common penalty levied is ₹1 lakh for non-filing of Form 3CEB even if the transaction value is very small.
Recent Amendments Relevant for AY 2025-26
- Safe Harbour Rules revised in 2024 – higher thresholds and margins for certain transactions.
- Master File & CbCR thresholds remain unchanged:
- Master File: Consolidated group revenue > ₹500 crore and aggregate international transactions > ₹50 crore (or intangibles transactions > ₹10 crore).
- CbCR: Consolidated group revenue > ₹5,500 crore (approx €750 million).
- APA & MAP applications continue to provide certainty for future years up to AY 2029-30.
Step-by-Step Compliance Checklist for AY 2025-26
Use this checklist to ensure 100% compliance:
Pre-31st March 2025
- Identify all related parties and associated enterprises (domestic & foreign).
- Map every cross-border transaction (including loans, guarantees, services, royalty, etc.).
- Determine whether any transaction falls under “deemed international transaction” u/s 92B(2).
April – July 2025
- Appoint a qualified transfer pricing consultant / in-house TP team.
- Collect functional asset risk (FAR) analysis data.
- Select the most appropriate method (CUP, RPM, CPM/TNMM, PSM, etc.).
- Perform economic analysis and benchmarking study (domestic + foreign comparables as applicable).
- Prepare contemporaneous transfer pricing documentation (Local File).
August – October 2025
- Finalise TP study report.
- If applicable for AY 2025-26.
- Obtain management approval on arm’s length ranges/margins.
- If aggregate value of international transactions exceeds thresholds, prepare Master File.
By 30th October 2025
- Complete statutory tax audit u/s 44AB (if applicable).
- Reconcile Form 3CEB data with audited financials.
By 15th November 2025
- Get Form 3CEB certified by a practising Chartered Accountant (must have valid full-time CoP).
By 30th November 2025
- Upload Form 3CEB on e-filing portal (mandatory before filing ITR.
- File ITR-5/ITR-6 (as applicable) by the same date.
By 30th November 2025 (or extended date)
- File Master File (Form 3CEAA & 3CEAB) if applicable.
- File CbCR (Form 3CEAD (by Indian parent/ATE) or Form 3CEAE (notification of surrogate entity).
Post Filing
- Retain TP documentation for 8 years from the end of relevant AY.
- Be ready to submit documentation within 30 days (or extended period) if called by TPO.
Practical Tips to Avoid Penalties
- Even if you believe your pricing is at arm’s length, file Form 3CEB. The penalty for non-filing is fixed and does not depend on adjustment.
- Do not leave Form 3CEB preparation to the last week of November – CA firms are flooded.
- Use the latest version of the utility from the income tax e-filing portal.
- Ensure Part C (particulars of international transactions) is completely filled – many penalties arise from incomplete disclosures.
- If no international transaction during the year, no need to file Form 3CEB (but document the nil position for future reference.