Form No. 48: Transfer Pricing Certification under Income-tax Act, 2025

Introduction

Form No. 48 is the newly introduced accountant’s report under Section 172 of the Income Tax Act, 2025, replacing the erstwhile Form 3CEB (prescribed under Section 92E of the Income Tax Act, 1961). It is a mandatory annual disclosure report certifying international transactions and/or specified domestic transactions at arm’s length. This article provides a part-by-part breakdown of Form No. 48, mapping key structural changes and compliance obligations for taxpayers and chartered accountants.

1. Background and Legal Basis

The Income-tax Act, 2025 consolidates and re-codifies India’s direct tax law. As part of this revamp, the statutory framework for transfer pricing, previously contained under Chapter X (Sections 92 to 92F) of the Income-tax Act, 1961, has been reorganized under the new Act’s Chapter on international and specified domestic transactions.

Section 172 of the Income-tax Act, 2025 mandates every taxpayer who has entered into international transaction(s) or specified domestic transaction(s) to obtain a report from a chartered accountant and furnish it in the prescribed form i.e. in Form No. 48. New sections/rules structure is as below:

While the substantive disclosure requirements remain largely preserved, Form 48 introduces a more structured digital-first design with dropdown selections, auto-populated fields, and transaction ID-based linkages.

2. Structure of Form No. 48 — Six Parts at a Glance

Form No. 48 is divided into six parts (A through F), each covering a distinct aspect of the taxpayer’s transfer pricing position:

3. Part A and B: Assessee Identification and Aggregate Amounts

Part A captures the basic identification particulars of the assessee like full name, complete address (including pin code, state, and country), and the Permanent Account Number (PAN).

Part B presents a macro-level financial summary in a six-column matrix (Received/Paid × three transaction categories: International, Deemed International, and Specified Domestic). Importantly, Part B is flagged as auto populated in the form, indicating that the amounts will be aggregated automatically from the detailed line items filled in Parts C and D. This eliminates reconciliation errors and ensures internal consistency of the report.

4.Part C: International Transactions and Deemed International Transactions

This is the operational heart of Form No. 48 for most cross-border taxpayers. It contains three sub-sections:

4.1.List of Associated Enterprises (Row 5)

Each AE must be assigned a unique AE ID (e.g., AE-1, AE-2) and disclosed with name, address, country/territory of residence, PAN/TIN or other unique identifier, and nature of relationship under Section 162(1). The form uses dropdown selection for the relationship code with 14 options (162(1)(a)(i) through 162(1)(l)), mirroring the definition of ‘associated enterprise’ in the new Act.

The erstwhile Form 3CEB required disclosure of the relationship under Section 92A. Under the new Act, this maps to Section 162(1) with the same substantive definition of ‘associated enterprise’, now explicitly codified across 14 relationship categories.

4.2. List of Persons for Deemed International Transactions (Row 6)

Where a transaction is structured through a third party and is deemed to be an international transaction by virtue of a prior arrangement between the AE and that third party, Row 6 requires disclosure of such persons with a unique Person ID (P-1, P-2, etc.).

4.3.Transaction-wise Details (Row 7)

For every identified transaction, a Transaction ID (T-1, T-2, etc.) is assigned. Each transaction record captures:

• Transaction type (from Note 6 detailed classification table)
• The linked AE ID and/or Person ID from Row 5 and 6
• Additional information specific to the transaction type (e.g., royalty rate, interest rate, guarantee fee) (from Column B of Note 7 detailed classification table)
• The amount as per books of account (received and paid)
• Arm’s length price and adjustment amounts are auto populated from Part E.

4.4. Advance Pricing Agreement (APA) Details (Row 8)

The form requires confirmation of whether the assessee is a signatory to any APA. If yes, the date of agreement, acknowledgement number of the application, and a linkage of Transaction IDs covered under the APA must be furnished along with the total transaction amount and the amount covered under the APA.

5. Detailed Transaction Type Classification (Note 6- detailed classification table)

One of the most comprehensive elements of Form No. 48 is the transaction type classification table in Note 6, spanning 16 broad categories with numerous sub-categories:

Note:

For financing transactions (rows 10 and 11), additional information such as the nature of the financing agreement, quantum, currency, interest rate, and actual interest paid/received must be provided as per Note 7. For guarantee transactions, the total guarantee amount, commission rate, and currency are required. Also, where there is interest paid or received or guarantee fee/commission paid/received, the amount of interest or guarantee shall be benchmarked.

6. Part D: Specified Domestic Transactions (Row 9 and 10)

Part D mirrors the structure of Part C but applies to specified domestic transactions under the new Act i.e., transactions between domestic-related parties that are required to meet the arm’s length standard.

The domestic AEs are identified under Section 162(2) with three relationship categories: 162(2)(a), 162(2)(b), and 162(2)(c). SDT Transaction IDs use the prefix ‘SDT-‘ to distinguish them from international transactions.

Types of Specified Domestic Transactions (Note 9)

7.Part E: Determination of Arm’s Length Price (Row 11)

Part E is the most technically intensive section of Form No. 48. It requires a structured presentation of the benchmarking analysis for each transaction or group of aggregated transactions.

7.1. Aggregation of Transactions

The form requires the taxpayer to disclose whether any transaction has been aggregated with other closely linked transactions for determination of arm’s length price. Where transactions are aggregated, the total amount, amount aggregated, and amount not aggregated must be reported. If a transaction is only partially aggregated, the balance non-aggregated amount becomes the ‘total amount’ for subsequent standalone benchmarking.

7.2.Transfer Pricing Methods

The Most Appropriate Method must be selected from the following six methods under Section 165(1): Comparable Uncontrolled Price (CUP), Resale Price Method (RPM), Cost Plus Method (CPM), Profit Split Method (PSM), Transactional Net Margin Method (TNMM), and Other Method (OTM).

7.3.Comparables Analysis and Statistical Measures

The number of comparables is classified into three bands:

This framework is consistent with Rule 10CA of the Income-tax Rules, 1962 (applicable to the 1961 Act), which prescribed the use of the arm’s length range (35th to 65th percentile) where multiple comparables exist.

7.4. Method-Specific Computation Templates

Form No. 48 provides structured computation templates (Refer Note 13-Detailed classification table) for the RPM, CPM, TNMM, and CUP methods which require a step-by-step build-up from the book value to the arm’s length price, including explicit disclosure of any adjustments made to the comparable’s margin or price. For PSM and Other Methods, the arm’s length price and adjustment amount are to be directly provided by the assessee.

7.5. Adjustments

International Transactions: If the transaction is in the nature of expense, the amount of adjustment shall be reduced from the book value of the transaction and if the transaction is in the nature of income, the amount of adjustment shall be added to the book value of the transaction.

Specified Domestic Transactions: Adjustment in the case of the specified domestic transaction- If the transaction is in the nature of expense, the amount of adjustment shall be added to the book value of the transaction and if the transaction is in the nature of income, the amount of adjustment shall be reduced from the book value of the transaction

In case the adjustment is required to be made in the international or specified domestic transactions, which have been aggregated, the assessee shall have the option to make the adjustment in one or more of the transactions so aggregated and a drop down to that effect shall be provided. For PSM and Other Methods, the arm’s length price and adjustment amount are to be directly provided by the assessee.

7.6.Additional Expense and Revenue Details (Refer Note 14-Detailed classification table)

Note 14 of Form No. 48 requires detailed disclosure of certain expenses and revenues particularly relevant for transfer pricing benchmarking of service transactions especially software, ITES, and knowledge-process outsourcing activities. The key expense categories include:

• Stock compensation, bonuses, or incentives paid by the assessee or its AE to employees of the assessee
• Cost/depreciation of assets, software, tools, licenses, or databases provided by the AE (including third-party and in-house AE-developed items)
• Travel and other expenses incurred by the AE for employees of the assessee travelling outside India
• Training expenses incurred by AEs for the assessee’s employees, or management/consultancy services provided by the AE
• All costs relating to seconded/transferred employees borne by the AE
• Outsourcing costs incurred by the assessee and/or AE
• Any other expenses incurred by the AE but utilized in the business operations of the assessee

The revenue details in Note 14(B) require separate disclosure of foreign currency fluctuation income and government subsidies/incentives, with a bifurcation of how much of these amounts were included in the computation of the arm’s length price.

8. Part F: Documentation Certification

Part F is activated only when the aggregate value of international transactions exceeds Rs. 1 crore or when specified domestic transactions are reported. It contains two key certifications:

• Whether the assessee satisfies conditions for non-maintenance of fresh documents under the proviso to Rule 84(4) (corresponding to the proviso to Rule 10D of the 1962 Rules).
• If fresh documentation is required, whether the assessee has maintained all prescribed information and documents under Section 171 of the Income-tax Act, 2025.

9.Certification by the Accountant

Form No. 48 concludes with a structured certification by the accountant, typically a Chartered Accountant  confirming that:

• The accounts and records of the assessee have been examined in relation to international and specified domestic transactions for the tax year ending 31st March.
• Proper information and documentation as prescribed have been maintained by the assessee.
• The particulars furnished in Form No. 48 are, in the accountant’s opinion and to the best of information and explanation received, true and correct.

The accountant is required to provide their name, membership number, name and PAN of the firm, firm registration number, UDIN (if applicable), place, and date of certification.

10. Key Differences: Form No. 48 vs. Form 3CEB

Change Legend: [NEW] New addition, [RENAMED] Renamed/renumbered, [MODIFIED] Structurally changed  [REMOVED] Removed

11. Practical Challenges and Compliance Burden

The transition from Form 3CEB to Form No. 48, while conceptually sound, imposes a materially higher compliance burden on taxpayers, chartered accountants, and tax departments alike. The following challenges are identified based on a detailed examination of the new form’s structure and its operational implications:

Challenge 1: Transaction ID-Based Relational Architecture

Form No. 48 introduces a relational database-like structure where every transaction must be tagged with a unique Transaction ID (T-1, T-2, etc. for international transactions; SDT-1, SDT-2, etc. for specified domestic transactions), and then cross-referenced with AE IDs, Person IDs, and Part E benchmarking entries.

For large multinational groups with dozens of intercompany transaction streams, covering services, royalties, loans, and goods, maintaining a consistent mapping across Parts C, D, and E will require significant process re-engineering. A single mismatch between the Transaction ID in Part C (Row 7) and the ID linked in Part E (Row 11) could render the form internally inconsistent and expose the assessee to audit scrutiny.

Existing ERP systems and TP documentation software may not natively support such a hierarchical transaction-tagging system, necessitating costly system upgrades or manual reconciliation layers.

Challenge 2: Auto-Population Dependency and Data Integrity Risk

Several critical fields in Form No. 48 including the aggregate amounts in Part B, the arm’s length price in Part C (Row 7), and the adjustment amounts are described as ‘auto populated’. This assumes a real-time, error-free integration between the underlying accounting system, the TP benchmarking tool, and the form-filing platform.

In practice, many Indian entities maintain books on legacy ERP systems (SAP, Oracle, Tally) not directly interfaced with transfer pricing databases. Any discrepancy between auto-populated figures and the manually computed arm’s length price will need to be resolved before filing, a reconciliation exercise that could be time-intensive in multi-jurisdictional group structures.

The reliance on auto-population also reduces transparency, making it harder for the certifying accountant to independently verify each figure before appending the certification.

Challenge 3: Granular Intangible Transaction Classification

The transaction type table in Note 6 (categories 9(a) through 9(d)) distinguishes between ownership transfers, use-right grants, and ‘other’ arrangements across 12 sub-types of intangible property ranging from marketing-related intangibles (trademarks, logos) to engineering-related intangibles (blueprints, trade secrets) and goodwill-related intangibles.

In practice, many intercompany arrangements involving intangibles do not fall neatly into a single sub-category. A composite license covering both a trademark and associated know-how may include categories 9(a)(i)(A) and 9(a)(i)(B). The form provides no guidance on bundled or overlapping intangible transactions, a significant source of uncertainty for technology companies, pharmaceutical groups, and consumer brands.

Incorrect classification will also distort the royalty-specific additional information required under Note 7 (date of agreement, rate of royalty, amount paid/payable), potentially triggering notices under the new Act.

Challenge 4: Financing Transaction Disclosure Complexity

Rows 10 and 11 of Note 6, read with Note 7, require transaction-level disclosure of: nature of the financing agreement, quantum, currency, interest rate for each borrowing/lending, and actual interest paid/received. For corporate groups with multiple tranches of inter-company debt including revolving credit facilities with variable interest rates, disaggregating and reporting each tranche as a separate transaction could result in dozens of line items.

Guarantee transactions (Rows 10(a)(iii) and 11(a)(iii)) require separate disclosure of: total guarantee amount, rate of corporate guarantee commission, currency, and actual commission charged. Given the complexity of implicit guarantees and the ongoing benchmarking debate (CUP vs. yield approach), this level of disclosure requires careful pre-filing analysis.

The form does not clarify whether revolving credit facilities should be reported as a single transaction or broken down by each drawdown, a question with material implications for entities with active treasury operations.

Challenge 5: Aggregation vs. Separate Benchmarking Tension

Part E requires upfront disclosure of whether transactions have been aggregated with ‘closely linked’ transactions for benchmarking. However, neither the form nor Note 10 defines what constitutes ‘closely linked’ transactions, historically left to the judgment of the assessee and accountant, guided by case law and OECD Guidelines on Transfer Pricing.

The form further requires that where a transaction is only partially aggregated, the non-aggregated balance must be separately benchmarked. This creates a layered disclosure obligation that may be difficult to operationalize particularly where the aggregation decision changes after TP documentation have been finalized.

The additional requirement under Row 11(1)(iii)(d), asking whether any transaction in the aggregated set has ‘also been separately benchmarked’, adds a further disclosure layer absent from Form 3CEB, which may be unclear where different methods have been applied to different sub-sets of a transaction portfolio.

Challenge 6: Note 14 Expense Disclosures: Operationalization Challenges

Note 14(A) requires a seven-category disclosure of expenses including stock compensation, AE-provided software/tools, seconded employee costs, outsourcing costs, and AE-borne travel expenses , with a split between: (i) amounts recorded in the books; (ii) amounts not recorded; (iii) total; and (iv) amounts included vs. excluded from the ALP computation.

Many of these expenses (e.g., stock options granted by the parent, cost of AE-provided databases and software licenses) are not separately tracked in the accounts of the Indian subsidiary. Constructing these figures requires coordination between the Indian entity, its parent company’s finance team, and HR/payroll functions, a cross-border data-gathering exercise that can be time-consuming and contentious.

The disclosure of amounts ‘not recorded in the books’ is particularly sensitive: it effectively requires the assessee to acknowledge off-balance-sheet costs the department may use to argue for an upward ALP adjustment, even where the assessee has excluded them from the ALP computation with reasoned justification.

Challenge 7: APA Linkage and Pending APA Scenarios

Row 8 requires the assessee to link specific Transaction IDs to an APA. However, in cases where a Bilateral or Multilateral APA is pending conclusion as on the filing date, it is unclear whether the transaction should be reported as covered under APA (with incomplete acknowledgement details) or excluded from the APA linkage entirely.

The form requires the ‘amount of the transaction covered under APA’ to be separately disclosed. For APAs covering only a percentage of total transactions (e.g., export transactions only), determining and disclosing the covered quantum at a transaction-ID level adds complexity not required under the old Form 3CEB.

Challenge 8: Elevated Certification Risk for the Accountant

The accountant’s certification in Form No. 48 requires the certifying CA to independently verify both that proper documentation has been maintained and that the particulars furnished are ‘true and correct’. With the expanded disclosure scope (intangible sub-types, financing tranches, note 14 off-book expenses), the risk of certifying an inadvertently incorrect form is materially higher than under Form 3CEB.

The introduction of UDIN linkage in the certification block means that any post-filing correction will require either a revised UDIN or a specific withdrawal process, a procedural step not required under the older regime.

Chartered accountants should reassess their engagement risk protocols, client representation letters, and management representation frameworks before undertaking Form 48 certifications for the first time.

Challenge 9: Transition Period Uncertainty and Parallel Compliance

The Income-tax Act, 2025, has been newly enacted and Rule 84 (governing documentation and Form 48 filing) is yet to be notified in final form as of the date of this article. This creates compliance uncertainty for taxpayers whose tax year ends 31st March 2026 where the form structure is known but precise procedural rules, filing deadlines, and portal specifications may not yet be operationally available.

Transfer pricing disputes initiated under the 1961 Act (relating to assessment years prior to AY 2026-27) will continue to be governed by the old regime. Taxpayers with pending assessments, DRP proceedings, or appeals must maintain parallel compliance frameworks, one for the legacy 1961 Act proceedings and one for the new 2025 Act filings.

12. Recommendations

The following recommendations are offered as practical, forward-looking guidance for taxpayers, their advisors, and certifying accountants navigating Form No. 48 for the first time. These are non-binding and should be adapted to the specific facts, risk profile, and group structure of each assessee.

 Recommendation 1: Build a Transaction Master Register Before Year-End

Taxpayers should immediately begin constructing a ‘Transaction Master Register (TMR) an internal database that assigns unique transaction IDs to every intercompany transaction stream as early in the financial year as possible. Each entry in the TMR should capture: the transaction type per Note 6, the AE involved, the currency, the approximate quantum, and whether the transaction will be aggregated or separately benchmarked.

This registry should be maintained dynamically throughout the year and reconciled with the books of account on a quarterly basis. A year-end rush to assign transaction IDs, a common pattern under the old Form 3CEB regime, will be far more damaging under the relational architecture of Form No. 48.

TMR should also make flag transactions subject to APAs, safe harbor elections, or prior year rollover positions so that the APA linkage in Row 8 can be populated accurately.

Recommendation 2: Conduct a Form 3CEB-to-Form 48 Mapping Exercise

Every taxpayer that has previously filed Form 3CEB should conduct a structured mapping exercise: for each disclosure in the prior year’s Form 3CEB, identify the corresponding Part, Row, and Transaction ID in Form No. 48. This exercise will surface gaps where the old form’s disclosures are insufficient for the new form’s requirements.

Particular attention should be paid to: (a) intangible transactions disclosed at a high level in Form 3CEB (e.g., ‘royalty payment’) but now requiring sub-classification under Note 6; (b) financing transactions that were a single line item but may need to be disaggregated by tranche or maturity; and (c) deemed international transactions that must now be separately disclosed in Row 6 with a distinct Person ID.

Recommendation 3: Proactively Address Note 14 Expense Data Collection

The Note 14 disclosures require data typically not available in the Indian subsidiary’s own books. Taxpayers should issue formal data requests to their parent company at the beginning of the compliance season, specifying: (a) the categories of expense required; (b) the format of disclosure (recorded vs. not recorded, included vs. excluded from ALP); and (c) the deadline for response.

Where expenses are not recorded in the Indian entity’s books, taxpayers should have a documented, defensible position on why those expenses were excluded from the ALP computation. The justification should be consistent with the TNMM benchmarking approach adopted, for example, if the tested party’s cost base does not include AE-provided software costs, the comparables’ cost bases should be adjusted accordingly or the exclusion documented as a valid functional difference.

Recommendation 4: Formalize the Aggregation Policy

Given the new form’s requirement to explicitly disclose aggregation decisions including partial aggregation scenarios and separate benchmarking of individually aggregated transactions taxpayers should formalize their ‘Aggregation Policy’ as part of their annual TP documentation process.

The policy should articulate: (a) the criterion for treating transactions as ‘closely linked’; (b) the hierarchy of aggregation vs. standalone benchmarking decisions; and (c) the process for revisiting aggregation decisions if the benchmarking outcome changes during the documentation phase. A written policy reduces the risk of inconsistent disclosures across years and provides a defensible basis if the aggregation approach is challenged in assessment.

Recommendation 5: Strengthen Accountant Engagement and Representation Protocols

The expanded certification scope in Form No. 48, combined with the UDIN linkage requirement, means that the certifying chartered accountant is taking on materially greater professional risk than under the Form 3CEB regime. Accounting firms should review and update: (a) engagement letters to explicitly describe the expanded verification scope; (b) management representation letters to require the assessee to confirm accuracy of Note 14 data, APA linkages, and off-book expense disclosures; and (c) internal review protocols to ensure a senior partner independently reviews the final form before the UDIN is generated.

Taxpayers should provide the certifying CA with access to underlying transaction-level data, not just aggregated summary schedules, at least 20 to 30 days before the filing deadline. Last-minute data provision, already problematic under Form 3CEB, will be far more consequential under the new form given the complexity of cross-verification required.

Recommendation 6: Establish a Risk-Tiered Compliance Approach

Not all intercompany transactions carry equal transfer pricing risk. Taxpayers should adopt a risk-tiered compliance approach under Form No. 48: directing the highest level of documentation rigor towards: (a) high-value transactions (individually or in aggregate exceeding Rs. 50 crore); (b) transactions involving unique or hard-to-value intangibles; (c) transactions with AEs in low-tax or no-tax jurisdictions; and (d) transactions where the prior year’s Form 3CEB was subject to additions or adjustments in assessment.

For low-risk transactions (e.g., routine service transactions benchmarked under a stable TNMM with consistent comparables set), a streamlined documentation approach with detailed support maintained in a readily accessible format may be appropriate. This risk-tiering allows TP teams to focus on limited time and resources where the compliance and litigation risk is highest.

Recommendation 7: Plan for Parallel Compliance During the Transition Period

Taxpayers with open assessments, pending DRP proceedings, or appeals relating to AY 2025-26 or earlier years will need to maintain a parallel compliance infrastructure: one for the legacy 1961 Act proceedings (governed by Form 3CEB, Section 92E, and the old TP rules) and another for the new 2025 Act filing (Form No. 48, Section 172, and Rule 84).

In particular, the evidentiary standards and documentation requirements under the 1961 Act (Rule 10D, Rule 10DA for Master File/CbCR) will continue to govern those earlier years. Taxpayers should resist the temptation to ‘update’ prior-year documentation to reflect the new Act’s framework, doing so could create inconsistent arguments in ongoing proceedings.

It is also advisable to track any future amendments to Rule 84 or the associated notification prescribing Form No. 48 in final form, as the current version may be subject to revision before the first filing deadline.

Disclaimer: The recommendations set out in Section 12 are non-binding and are provided for general information and educational purposes only. They do not constitute legal, tax, or professional advice. Readers should consult their qualified advisors before taking any action based on the above.