Transfer Pricing (Cost-Based Methods)
Support for cost-based transfer pricing analysis, documentation and compliance for related-party transactions.
- Estimate Cost
- ₹50,000 – ₹3,00,000
- Typical duration
- 30 days
Service overview
A transfer-pricing service for transactions between associated enterprises where a cost-based method may be appropriate.
The focus is on making cost information reliable enough to support pricing, budgeting and operating decisions. The approach should fit the company's production or service model.
Who needs it? / When is it needed?
Indian or multinational groups with inter-company supply or service arrangements.
It is most useful when margins are unclear, costs vary unexpectedly, product prices are being reviewed or management needs a consistent basis for comparing jobs and processes.
What to expect from the WCP Professionals
The professional would understand the transaction, examine the cost base, identify relevant comparables or mark-up logic and coordinate the supporting documentation.
How the work would proceed:
- The professional would identify the controlled transaction, understand the functions performed and risks assumed by each related entity, and examine how the cost base has been assembled
- They would assess whether a cost-based method is suitable, review the proposed mark-up and coordinate the benchmarking/documentation needed for the tax position
- The conclusion must be supported by the actual transaction and applicable transfer-pricing rules
Key deliverables
Transfer-pricing analysis, method-selection note, documentation support and compliance checklist.
The output should state its cost-allocation method and assumptions so the business can repeat the calculation. Any estimate should be distinguished from an audited or statutory cost figure.
Standard turnaround time
2-6 weeks depending on transaction complexity.
The first exercise may take longer while cost codes, production data and allocation assumptions are agreed. Recurring reports can be prepared faster once the business uses consistent source records.
Government fees, timelines & key outcomes
- No separate government fee for the analysis
- Statutory tax filing and reporting deadlines depend on the taxpayer's circumstances
- The outcome is defensible documentation and reduced transfer-pricing risk
No government fee applies to ordinary management-costing advice. A statutory cost audit or filing, where applicable, has separate professional and government costs which should be confirmed for the company's circumstances.
Forms & filings involved
Transfer-pricing disclosures, accountant's report and other applicable income-tax forms for the relevant tax year.
Internal cost models do not require a standard government form. Cost-audit forms and filings should be used only where the company falls within the applicable statutory requirements.
Documents required
Inter-company agreement, cost records, invoices, organisational structure and prior transfer-pricing documentation.
The analysis should be tied to underlying purchases, payroll, inventory and production records. If operational data does not reconcile with the accounts, that limitation should be disclosed in the report.
What we need from you
Complete transaction data and a clear description of the actual functions performed by each group entity.
Please appoint someone from finance and someone from operations to validate the inputs. Costing assumptions, production volumes and overhead allocations should be confirmed before results are used to set prices.
Important conditions
The Income-tax Act, 2025 applies for Tax Year 2026-27 onwards, while earlier years continue under the earlier framework.
The result is only as reliable as the source data and the chosen costing method. A management costing exercise does not replace a statutory audit or certification by a qualified cost auditor.
Additional information
Transfer pricing is fact-specific. A cost-plus calculation cannot be justified without examining functions, assets and risks.
The same cost data can feed into budgeting, product pricing, inventory controls and management reporting, provided that definitions remain consistent across reports.
The estimated cost covers indicative professional fees only. Government fees, stamp duty and taxes are payable at actuals.
How it works
- 1. Raise a service enquiry describing your requirement.
- 2. A Relationship Manager reviews it and opens it for bidding.
- 3. Pay into escrow and assign the professional you select.
- 4. Track progress to completion, then accept and release payment.
Frequently asked questions
What is the cost plus method?
A transfer pricing method that adds an arm's-length mark-up to the cost of goods or services supplied between related parties.
When is transfer pricing documentation required?
When a business has international or specified domestic transactions with associated enterprises above the thresholds in the Income-tax Act.
What is Form 3CEB?
The accountant's report on international and specified domestic transactions, filed before the return due date.
Why do cost records matter for transfer pricing?
Cost-based methods rely on an accurate, well-documented cost base, which tax officers examine closely.