Transfer Pricing for SMEs
In today’s global economy, even small and medium enterprises (SMEs) are increasingly engaging in international or cross-border transactions—whether through exports, imports, technical collaborations, or dealings with overseas subsidiaries. But here’s the catch: when such related-party transactions occur, Transfer Pricing (TP) regulations come into play.
At Aarthika Globcorp, we understand that SMEs often find Transfer Pricing compliance confusing and resource-intensive. Yet, it’s a critical regulatory requirement—not just for large corporations but also for growing businesses aiming to maintain transparency and avoid unnecessary tax disputes. Our team helps SMEs simplify this complex compliance landscape through structured documentation, accurate benchmarking, and end-to-end TP filing support.
How It’s Done:
At Aarthika Globcorp, we follow a structured 5-step approach to ensure every SME stays compliant without losing focus on business growth:
- Identification of International Transactions – Detecting all related-party dealings that fall under TP rules.
- Functional & Risk Analysis – Evaluating each party’s role, risks, and value contribution in the transaction.
- Benchmarking Study – Comparing your pricing with industry standards using databases to determine the Arm’s Length Price (ALP).
- Documentation Preparation – Compiling detailed TP files, local files, and master files as per statutory norms.
- Filing & Certification – Filing Form 3CEB and supporting documentation certified by a Chartered Accountant.
Documents Required:
At Aarthika Globcorp, we follow a structured 5-step approach to ensure every SME stays compliant without losing focus on business growth:
- Identification of International Transactions – Detecting all related-party dealings that fall under TP rules.
- Functional & Risk Analysis – Evaluating each party’s role, risks, and value contribution in the transaction.
- Benchmarking Study – Comparing your pricing with industry standards using databases to determine the Arm’s Length Price (ALP).
- Documentation Preparation – Compiling detailed TP files, local files, and master files as per statutory norms.
- Filing & Certification – Filing Form 3CEB and supporting documentation certified by a Chartered Accountant.
FAQs
Form 3CEB—it’s a report from a Chartered Accountant certifying that all related-party transactions are at arm’s length and compliant with Section 92E of the Income Tax Act.
Non-maintenance of documentation, non-filing, or incorrect filing can attract penalties up to 2% of the value of each international transaction, and even further scrutiny by tax authorities.
Benchmarking ensures your pricing aligns with industry averages or comparable uncontrolled transactions, and it’s a crucial component of TP documentation for defending your case during audits.
Technically no. As per law, the documentation should be maintained contemporaneously—that is, it must be ready before the due date for filing the income tax return.
It must be updated annually, reflecting any changes in business model, pricing, or international transactions. Historical data older than one year is not sufficient for compliance.