India: Transfer Pricing

The intricacies of cross-border transactions could overwhelm, as the process has to be planned from the perspective of transfer pricing and double taxation. Imagine a business group operating with two associated group companies-one each operating Overseas and in India. While the overseas firm searches prospects, finalizes clients, and secures orders, the Indian arm offers software, technical, and operational support. Despite running separate operations, both companies are owned by the same promoters who own and run both businesses. From a business standpoint, this setup works quite well.

An engineering, procurement and construction contract in India is taxed on the strength of decisions taken before the award: how the scope is divided, which entity signs, where title to equipment passes, and what the employer is told to withhold.

The Taxation and Other Laws (Amendment) Act, 2026 (Act No. 21 of 2026) received Presidential assent on 17 August 2026 and, save as otherwise provided, is deemed to have come into force from 1 April 2026.

インドの所得税制度は、過去60年以上の歴史のなかで最も広範かつ抜本的な構造改革を経験しました。2025年所得税法（IT Act, 2025）は、従来の1961年所得税法（IT Act, 1961）に代わるものであり、2026年4月1日に施行されました。さらに、本法には直接税中央委員会（CBDT）によって2026年3月20日に告示された2026年所得税Š

India has emerged as one of the world’s leading destinations for Global Capability Centres (GCCs), with multinational corporations increasingly establishing captive centres to manage global operations, technology development, research and development, finance, legal support, data analytics and business process management functions.

The Income-tax Act, 2025 introduces significant amendments to India's transfer pricing regime, fundamentally restructuring how associated enterprise relationships are determined and expanding the scope of international transactions subject to arm's length pricing requirements.

No changes have been proposed in the Finance Bill, 2026 (Bill) on the personal and corporate income tax rates.

This playbook offers a practical framework for mid-sized global groups entering India, covering capital structuring, treaty outcomes, PE defence, cross-border payments, GST treatment, and TP governance.

With the increasing globalization, cross-border transactions are integral to modern business strategy.