Section 92 (s.92): India’s Transfer Pricing Provision
Section 92 of the Income-tax Act, 1961 — the provision that governs transfer pricing in India: the pricing rule, the definitions, the TPO, the documentation and the penalties.
Definition
Section 92 of the Income-tax Act, 1961 is the provision under which India governs transfer pricing. It states the pricing rule, defines who and what is covered, and hands the examination to the Transfer Pricing Officer. The framework in one map:
| The provision | The content |
|---|---|
| s.92(1) | The arm’s length pricing rule — income from an international transaction or a specified domestic transaction between associated persons is computed with reference to the arm’s length price |
| s.92(2) | The definitions: international transaction, specified domestic transaction, associated person, and the arm’s length price (having regard to the functions performed, the assets employed and the risks assumed) |
| s.92(3) | Thin capitalisation — the interest deduction cap on borrowings from associated enterprises |
| s.92A–92C | The TPO’s jurisdiction and procedure — the determination of the arm’s length price runs under s.92C |
| s.92AA | Advance rulings on the TP method (the AAR) — the method fixed for future years before they are filed |
| s.92CB | The safe harbour rules (Rules 10TA–10TE) — the eligible transactions priced at the prescribed circumstances, on the Form 3CEFA election |
| s.92D | The expert report mechanism in the proceeding |
The machinery sits in the Rules under section 92 and the attached penalty provisions:
| The provision | The content |
|---|---|
| Rule 10B | The methods — CUP, resale price, cost plus, UCPM, TNMM, profit split, any other method — applied under the best method principle |
| Rule 10D / Rule 10DA | The documentation — the Local File (Rule 10D) and the Master File (Rule 10DA) |
| Rule 10DB | The CbCR — the country-by-country report (Action 13) for the ₹1,000 cr groups |
| s.271AA | The penalty — 10% of the underpayment of tax from the TP adjustment; blocked where the contemporaneous documentation is in place and produced |
| s.234A / 234B | The interest on the adjustment’s tax (1% or 1.5% per month, per the filing position) |
| s.282BC | The production of the contemporaneous documentation — the 30-day window from the notice |
The scope tests in one line: the transaction is in scope where the associated persons’ aggregate value in the year exceeds ₹30 million, or does not exceed ₹30 million but exceeds 10% of all such transactions between the persons; and the associated person test (s.92(2)) is the 26% voting power (directly or indirectly) or the control / management limbs. The companion guides carry the depth: the s.92 overview, the methods (Rule 10B), the documentation tiers (10D/10DA, CbCR) and the audit defense (the TPO’s proceeding).
Example
An Indian manufacturer (the tested party) sells a component to its associated enterprise in Germany — the transaction is an international transaction (one party a non-resident), the parties are associated persons (the group holding’s indirect voting power crosses 26%), and the year’s value clears the ₹30 million test. The price is tested under s.92(1) — the method (TNMM on the operating margin, per Rule 10B) is applied with the benchmark study, the result documented in the Local File within the 30-day window, and the return filed in accordance with it. If the TPO (jurisdiction under s.92C) adjusts the price, the tax consequence runs with the s.271AA penalty question and the 234A/234B interest, and the double taxation (where the German correlative relief does not follow) is the subject of the MAP under the DTA.
See also
FAQ
Does s.92 apply only to cross-border transactions? No — the specified domestic transactions (both parties resident, same ₹30 million / 10% test) are in scope under the same arm’s length rule, with the Local File’s domestic-transaction blocks covering them. The cross-border and the domestic classes are documented in the same file; the jurisdiction guide has the scope check.
Is the s.92(2) associated-person test the same as the OECD’s? In substance, close — the voting-power test and the control/management limbs track the OECD’s associated-enterprise concept, and the related party glossary has the comparison. The edges differ (the specified-domestic-transaction thresholds, the documentation split), which is why the jurisdiction comparison keeps the India column separate.
Where do the penalties for a non-arm’s-length price sit? Outside s.92 — in s.271AA (the 10% penalty, blocked by the contemporaneous documentation) and the 234A/234B interest. The s.92 adjustment is the income consequence; the documentation is what limits the penalty consequence (see contemporaneous documentation).
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Related docs
India Transfer Pricing: The Complete s.92 Overview (2026)
The Indian transfer pricing framework end to end: section 92 and its sub-sections, the Rule 10B methods, the documentation tiers, the thresholds, the penalties and the TPO.
Read docRule 10D: Local File Requirements Under India's TP Rules
Rule 10D defined: the rule prescribing what the contemporaneous local documentation must contain — and the blocks that make up the Local File in an Indian transfer pricing examination.
Read doc