Skip to content

    One price, held in both countries

    We set the markup from one price study and write it into the agreement. Then we file India's report and the US return on it, and plan the year-end true-up before it happens.

    The method and markup reported should be the ones in the signed intercompany agreement. (read where we wrote it)

    31 OctoberForm 3CEB, India's yearly transfer pricing report

    How does a price hold up in two countries?

    The first step decides most of it. The rest keep the two countries' files telling the same story.

    1. Set one price both countries accept

      A markup matched to what independent companies earn for similar work, backed by one price study and one agreement used in both countries.

    2. File each country's report on it

      In India, Form 3CEB by 31 October, listing every dealing with the US parent. In the US, Form 5471 with the parent's return, matching India's figures.

    3. Plan the year-end true-up

      Most groups invoice at an estimated markup and correct it after the year ends. The correction needs a GST debit or credit note, and the money must arrive within nine months of the invoice.

    4. Keep withholding and US state tax in step

      Tax held back on payments between your companies, at the treaty's rates where they apply. In the US, a state-by-state check of where your software sales mean you must collect sales tax.

    What do founders ask about US–India tax?

    What is transfer pricing?

    The price companies in one group charge each other across a border. India wants the Indian company to earn enough, and the IRS wants the US deduction to be reasonable. Both test the same price.

    What markup should an Indian subsidiary charge its US parent?

    What independent companies doing similar work earn, shown by a current price study. India's safe harbour rules accept a fixed markup instead. From tax year 2026-27 it is 15.5% on operating costs for IT services, up to ₹2,000 crore, chosen for five years. We compare it with a price study first.

    When is Form 3CEB due?

    On 31 October, a month before the tax return, for a company whose year ends on 31 March. There is no minimum value, so a single reimbursement is enough to need one. From tax year 2026-27 it becomes Form 48, due on the same date.

    What does a missing Form 5471 cost?

    $10,000 per form for each year, whether or not any US tax is due, and up to $50,000 more after an IRS notice. The parent's whole return can also stay open to assessment.