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Transfer pricing audit limit and Form 3CEB applicability FY 2025-26

Is a transfer pricing report required for FY 2025-26 (AY 2026-27)? For international transactions there is no limit — one rupee with a foreign associated enterprise is enough. For specified domestic transactions the line is ₹20 crore. Test the relationship and the transactions, and get the 2026 due date, the penalty at stake and the documentation you need to hold.

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Is the other party an associated enterprise?

Section 92A — select every test met at any time during FY 2025-26. Leave all unselected if none applies.

International transactions

Was there any transaction with that associated enterprise where either of you is a non-resident?

Goods, services, loans, guarantees, receivables, reimbursements, shared costs, intangibles — charged or free

Any transaction with an unrelated person under a prior agreement with — or on terms settled by — the associated enterprise?

Section 92B(2) treats it as an international transaction, even where the unrelated person is a resident

Aggregate value of international transactions in the year (₹ lakh)

As recorded in the books. Drives the Rule 10D documentation test, not Form 3CEB itself.

Specified domestic transactions

Any domestic transactions of the kind listed in Section 92BA?

Transfers of goods or services between a tax-holiday unit and other units or closely connected persons (Sections 80-IA(8), 80-IA(10), 10AA and similar), or dealings of a concessional-rate manufacturing company under Section 115BAB

Payments to directors, relatives and other related parties covered by Section 40A(2)(b) are not specified domestic transactions — that limb was removed from Section 92BA from AY 2017-18.

How the transfer pricing audit limit works for FY 2025-26 (AY 2026-27)

Section 92E of the Income-tax Act, 1961 requires every person who has entered into an international transaction or a specified domestic transaction during the year to obtain a report from an accountant and furnish it in Form 3CEB by the specified date. For international transactions there is no monetary limit at all. A single reimbursement, an interest-free loan or a guarantee given without a fee, between an Indian entity and its foreign associated enterprise, is enough to require the report. The search for a "transfer pricing audit limit for international transactions" has a short answer: there is none.

What has to be established is the relationship and the transaction. Two enterprises are associated enterprises under Section 92A where one participates in the management, control or capital of the other, and Section 92A(2) lists the situations in which that is deemed — among them holding 26% or more of the voting power, a loan amounting to 51% or more of the book value of the borrower’s total assets, a guarantee of 10% or more of total borrowings, the power to appoint more than half the board or an executive director, complete dependence on the other’s intangibles, and supply of 90% or more of raw materials on influenced terms. An international transaction under Section 92B is one between associated enterprises where either or both are non-residents, and Section 92B(2) extends it to a transaction with an unrelated person that was arranged in advance with the associated enterprise.

Specified domestic transactions are the one place a threshold exists. Section 92BA covers certain transactions connected with profit-linked deductions and concessional tax regimes — inter-unit transfers and dealings with closely connected persons — and applies only where their aggregate value exceeds ₹20 crore in the year, a limit raised from ₹5 crore by the Finance Act 2015. Payments to related parties under Section 40A(2)(b) were removed from the definition from AY 2017-18. For FY 2025-26 the report is due by 31 October 2026 and the return by 30 November 2026; the extension the CBDT gave for tax audit reports in September 2026 did not extend to these cases. Failure to furnish the report attracts a penalty of ₹1,00,000 under Section 271BA.

Worked example — a small subsidiary with ₹60 lakh of group transactions

An Indian private company is a wholly owned subsidiary of a Singapore company. In FY 2025-26 it billed the parent ₹48 lakh for software support and received a ₹12 lakh reimbursement of travel costs. It has no tax-holiday units. Turnover is ₹3.2 crore.

Inputs

RelationshipParent holds 100% of voting power (26% test met)

Cross-border transaction with the AEYes — services and reimbursement

Aggregate international transactions₹60 lakh

Specified domestic transactionsNone

Output

Form 3CEBRequired — no threshold for international transactions

Due date31 October 2026; return by 30 November 2026

Rule 10D documentationDetailed list not mandatory — aggregate does not exceed ₹1 crore

Penalty if not filed₹1,00,000 under Section 271BA

Penalty if not reported or incorrect2% of ₹60 lakh = ₹1,20,000 under Section 271AA

The company is small, and the ₹1 crore relief in Rule 10D(2) spares it the full documentation list — but nothing spares it Form 3CEB. The reimbursement has to be reported too, even though no margin was earned on it. And because Section 92E applies, its return due date is 30 November, not the audit-case date.

Common mistakes

Looking for a turnover or transaction limit

There is none for international transactions. The ₹1 crore figure people remember is the Rule 10D(2) documentation relief, and the ₹20 crore figure is for specified domestic transactions. Neither removes the Form 3CEB requirement for a cross-border transaction with an associated enterprise.

Leaving out transactions that had no charge

Interest-free loans, corporate guarantees given without a fee, outstanding receivables, cost reimbursements and services provided free are all international transactions. Omitting them is a failure to report under Section 271AA, at 2% of the value.

Testing association only on shareholding

Section 92A(2) has several tests that have nothing to do with equity — a loan of 51% of total assets, a guarantee of 10% of borrowings, 90% of raw materials from one supplier on influenced terms, dependence on the other’s intangibles. A foreign lender or sole supplier can be an associated enterprise with no shares held either way.

Treating director remuneration as a specified domestic transaction

Payments to persons specified in Section 40A(2)(b) were part of Section 92BA until the Finance Act 2017 removed them from AY 2017-18. They no longer count towards the ₹20 crore test and are not reported in Form 3CEB.

Using the tax audit due date

An assessee to whom Section 92E applies has a return due date of 30 November and a Form 3CEB date of 31 October. The CBDT extension of the tax audit date to 21 October 2026 for AY 2026-27 did not move the Form 3CEB date.

Reading the ₹1 crore relief as an exemption from proving arm’s length

Rule 10D(2) relieves the assessee from maintaining the specific documents listed in Rule 10D(1). The assessee must still be able to substantiate, from material available, that the price was at arm’s length, and must still file Form 3CEB.

Filing the report but not keeping the documents ready

Form 3CEB certifies that the prescribed documentation has been maintained. The documentation should exist by the specified date. If it is called for in assessment and not produced within the time allowed, Section 271G applies at 2% of the transaction value.

Frequently asked questions

What is the transfer pricing audit limit for international transactions in FY 2025-26?+

There is no limit. Under Section 92E, any international transaction with an associated enterprise, of any value, requires an accountant’s report in Form 3CEB. The ₹1 crore figure applies only to the detailed documentation under Rule 10D, and the ₹20 crore figure only to specified domestic transactions.

When is Form 3CEB applicable for AY 2026-27?+

When a person has entered into an international transaction — a transaction between associated enterprises where either or both are non-residents — or specified domestic transactions whose aggregate value exceeds ₹20 crore in the year. It applies to every kind of person, not only companies.

What is the specified domestic transaction limit for FY 2025-26?+

An aggregate value exceeding ₹20 crore in the previous year, under Section 92BA. The limit was ₹5 crore until the Finance Act 2015 raised it from AY 2016-17. Once the aggregate crosses ₹20 crore, all such transactions are covered.

What is the due date of Form 3CEB for AY 2026-27 — was it extended in 2026?+

31 October 2026, and it was not extended. It falls one month before the due date of the return, which for assessees covered by Section 92E is 30 November 2026; the CBDT extension of September 2026 covered tax audit reports only.

What is the penalty for not filing Form 3CEB?+

₹1,00,000 under Section 271BA. Separately, failure to keep the prescribed documents, failure to report a transaction, or furnishing incorrect information attracts 2% of the value of each transaction under Section 271AA, and failure to furnish documents when called for attracts 2% under Section 271G. These penalties are subject to the reasonable-cause defence in Section 273B.

Who is an associated enterprise?+

An enterprise that participates, directly or indirectly, in the management, control or capital of the other, or where the same persons do so in both — Section 92A(1). Section 92A(2) deems this where, among other tests, one holds 26% or more of the voting power in the other, lends 51% or more of the book value of its total assets, guarantees 10% or more of its borrowings, appoints more than half its board, or supplies 90% or more of its raw materials on influenced terms.

Is Form 3CEB required if international transactions are below ₹1 crore?+

Yes. The ₹1 crore threshold in Rule 10D(2) only relieves the assessee from maintaining the detailed information and documents listed in Rule 10D(1). The accountant’s report in Form 3CEB is still required.

Is Form 3CEB required for a transaction with an unrelated foreign party?+

No, unless Section 92B(2) applies. A transaction with an unrelated person is deemed an international transaction only where a prior agreement exists between that person and the associated enterprise, or the terms are determined in substance between them.

Does a tax audit under Section 44AB cover the transfer pricing report?+

No. They are separate reports under separate sections. An assessee can need both, either or neither. Where both apply, the return due date is 30 November and the two reports have their own dates.

What is the penalty for not filing the transfer pricing report for FY 2026-27 (tax year 2026-27)?+

A fee of ₹50,000 where the failure continues for up to one month and ₹1,00,000 thereafter. For tax year 2026-27 onward the accountant’s report is required under Section 172 of the Income-tax Act, 2025, and the Finance Act 2026 replaces the flat ₹1,00,000 penalty with this fee under Section 428(d). FY 2025-26 is still reported in Form 3CEB under the 1961 Act.

Authoritative sources

CBDT

Income-tax Act, 1961 — Section 92E — Every person who has entered into an international transaction or specified domestic transaction must obtain an accountant’s report and furnish it by the specified date in the prescribed form — Form 3CEB under Rule 10E.

CBDT

Income-tax Act, 1961 — Sections 92A and 92B — Section 92A defines associated enterprise and lists the deeming tests; Section 92B defines international transaction, including the deemed transaction through a third party in sub-section (2).

CBDT

Income-tax Act, 1961 — Section 92BA — Defines specified domestic transaction and applies only where the aggregate of such transactions exceeds ₹20 crore in the previous year.

CBDT

Income-tax Rules, 1962 — Rule 10D — Lists the information and documents to be kept under Section 92D; sub-rule (2) relieves an assessee whose aggregate international transactions do not exceed ₹1 crore from the detailed list.

CBDT

Income-tax Act, 1961 — Sections 271AA, 271BA and 271G — Section 271BA: ₹1,00,000 for failure to furnish the report under Section 92E. Sections 271AA and 271G: 2% of the value of the transaction for documentation and reporting failures.

Always confirm against the latest version of the source. Regulations evolve and amendments are common.

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Last reviewed: 2026-10-01 · For informational purposes only — not professional advice.