Domestic Transfer Pricing in India: Section 92BA and the ₹20 Crore Threshold
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Most finance teams associate transfer pricing with cross-border dealings, so a notice over two Indian companies in the same group often comes as a surprise. Domestic transfer pricing extends the arm's length principle to certain specified domestic transactions, including some dealings between related Indian parties, and it catches more groups than people expect — profit-linked deductions, transactions with connected persons, and tax-holiday units all sit inside it. This guide explains what a specified domestic transaction is under Section 92BA, the ₹20 crore threshold that triggers it, which transactions are covered, and what compliance looks like. It is written for Indian businesses and advisors who need to know whether they are in scope. The same primary-source rigour runs through AskSolique's research platform for CA firms.
What domestic transfer pricing is
Domestic transfer pricing applies India's transfer pricing machinery — the arm's length price, the prescribed methods, documentation and the Form 3CEB report — to specified domestic transactions covered by Section 92BA. It was introduced by the Finance Act, 2012, after the Supreme Court in the GlaxoSmithKline case suggested extending arm's length discipline to domestic related-party dealings to curb profit shifting between group entities taxed at different effective rates.
The governing provision is Section 92BA of the Income-tax Act, 1961, which defines the "specified domestic transaction". If a transaction falls within that definition and the value threshold is met, its income or expense must be computed having regard to the arm's length price, exactly as a cross-border transaction would be. The primary sources behind this chapter are the Act, the rules and the tribunal decisions interpreting them.
The ₹20 crore threshold
Domestic transfer pricing does not apply to every related-party transaction. It is triggered only where the aggregate of a taxpayer's specified domestic transactions in a year exceeds ₹20 crore. Below that aggregate, Section 92BA does not apply and no Form 3CEB is required on the domestic side.
The threshold was originally ₹5 crore when the provision was introduced. The Finance Act, 2015 raised it to ₹20 crore with effect from AY 2016-17, which took most ordinary group transactions out of the net and left domestic transfer pricing focused on larger arrangements. The aggregate is tested across all specified domestic transactions together, not transaction by transaction.
Which transactions are specified domestic transactions
Section 92BA lists the categories. A transaction is a specified domestic transaction only if it is not an international transaction and falls within one of these, once the ₹20 crore aggregate is crossed:
- Transactions under Section 80A — inter-unit transfers of goods or services affecting the computation of a profit-linked deduction.
- Section 80-IA(8) transfers — goods or services transferred between an eligible (tax-holiday) business and other businesses of the same taxpayer.
- Section 80-IA(10) business — arrangements with closely connected persons that produce more than ordinary profits for the eligible business.
- Other Chapter VI-A or Section 10AA deductions to which the Section 80-IA(8) or (10) rules apply.
- Transactions involving Section 115BAB companies — business between a new manufacturing company taxed at the concessional rate and persons referred to in Section 115BAB(6).
Notably, payments to related directors and specified persons under Section 40A(2)(b) were originally covered but were removed from Section 92BA with effect from AY 2017-18, so ordinary related-party expenditure is no longer a domestic transfer pricing trigger on its own. If you want the wider picture of how the arm's length principle works, start with our explainer on what transfer pricing is and how it applies in India.
| Point | Position |
|---|---|
| Governing section | Section 92BA, Income-tax Act, 1961 |
| Threshold | Aggregate specified domestic transactions exceed ₹20 crore |
| Pricing standard | Arm's length price under Section 92C (five methods + other method) |
| Report | Form 3CEB under Section 92E, due 31 October 2026 for AY 2026-27 |
| Documentation | Maintained under Section 92D read with Rule 10D |
What compliance looks like
Once a taxpayer is in the domestic transfer pricing net, the obligations mirror the international regime. The arm's length price for each specified domestic transaction must be determined under Section 92C using the most appropriate of the prescribed methods. Documentation must be maintained under Section 92D and Rule 10D, and the accountant's report in Form 3CEB must be obtained and filed.
The due dates are the same as for international transactions — Form 3CEB by 31 October 2026 and the return by 30 November 2026 for AY 2026-27 — and, importantly, they were not covered by this year's general tax-audit extension. The filing mechanics and that deadline point are set out in our guide to the transfer pricing audit and Form 3CEB due dates.
Where domestic transfer pricing catches people out
Two patterns account for most surprises. The first is the tax-holiday unit: a business claiming a deduction under Section 10AA or Chapter VI-A that transfers goods or services to or from another unit of the same taxpayer can inflate the eligible profit, and Section 80-IA(8) pulls that into the arm's length net. The second is the concessional-rate manufacturer under Section 115BAB, where dealings with the persons covered by Section 115BAB(6) are scrutinised to ensure the low rate is not used to absorb profit that belongs elsewhere. A related rule also covers specified transactions involving a new manufacturing co-operative society under Section 115BAE(4).
Because the test is an aggregate across all specified domestic transactions, a group can cross ₹20 crore through a combination of smaller flows that individually looked harmless. Tracking the running aggregate through the year — rather than discovering it at filing — is the practical discipline that keeps a taxpayer out of trouble, and it is exactly the kind of multi-provision reasoning the AskSolique research workspace is built to support.
The bottom line
Domestic transfer pricing brings the arm's length principle home: specified domestic transactions under Section 92BA — profit-linked deduction transfers, tax-holiday unit dealings, Section 115BAB arrangements and Section 115BAE(4) transactions — must be priced at arm's length once the aggregate crosses ₹20 crore in a year, with the same Form 3CEB, documentation and October–November deadlines as cross-border cases. The categories are narrower than they once were, but the exposure on larger arrangements is real. If your firm needs to test applicability and build the position with every citation traceable to the section it came from, see how AskSolique supports CA firms on income-tax research and drafting.
Frequently Asked Questions
What is domestic transfer pricing in India?
Domestic transfer pricing applies India's arm's length price rules to specified domestic transactions covered by Section 92BA of the Income-tax Act, 1961. Introduced by the Finance Act, 2012, it requires the income or expense from a qualifying domestic transaction to be computed at arm's length — using the same methods, documentation and Form 3CEB report that apply to cross-border transactions — once the value threshold is met.
What is the threshold for domestic transfer pricing?
Domestic transfer pricing applies only where the aggregate of a taxpayer's specified domestic transactions exceeds ₹20 crore in a financial year. The threshold was originally ₹5 crore and was raised to ₹20 crore by the Finance Act, 2015, with effect from AY 2016-17. The test is applied to all specified domestic transactions in aggregate, not to each transaction separately, so several smaller flows can combine to cross the limit.
Which transactions are specified domestic transactions?
Under Section 92BA, specified domestic transactions include inter-unit transfers affecting a Section 80A deduction, transfers of goods or services under Section 80-IA(8), dealings producing more than ordinary profits under Section 80-IA(10), transactions under other Chapter VI-A provisions or Section 10AA to which Section 80-IA(8) or (10) applies, transactions covered by Section 115BAB(6), and transactions covered by Section 115BAE(4). Section 40A(2)(b) payments were removed from the scope with effect from AY 2017-18.
Is Form 3CEB required for domestic transfer pricing?
Yes. Where specified domestic transactions exceed the ₹20 crore aggregate threshold, the taxpayer must obtain and file the accountant's report in Form 3CEB under Section 92E, just as for international transactions. For AY 2026-27 the report is due 31 October 2026 and the return 30 November 2026. Documentation must also be maintained under Section 92D read with Rule 10D.
Are director or related-party payments covered by domestic transfer pricing?
Not any longer on their own. Payments to directors and specified persons under Section 40A(2)(b) were originally within Section 92BA but were removed with effect from AY 2017-18. Such expenditure can still be examined for reasonableness under Section 40A(2) itself, but it no longer triggers domestic transfer pricing or a Form 3CEB obligation unless the transaction falls within another specified-domestic-transaction category.
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