In the digital economy, multinational IT companies operate through complex cross-border structures shared services, IP ownership, cloud infrastructure, and global capability centres GCCs).
At BC Shetty & Co, we specialise as transfer pricing consultants in Hyderabad, delivering expert-driven solutions for transfer pricing in Hyderabad for IT/ITES, SaaS, and tech-driven multinationals, helping them navigate Income Tax compliance with confidence and parallelly achieve tax efficiency.
Transfer pricing refers to the pricing of transactions between associated enterprises located in different tax jurisdictions.
Section 161 of the Income-tax Act, 2025 mandates that international transactions must be computed with regard to the Arm’s Length Price (ALP).
Example (IT Company):
An Indian captive centre provides software development services to its US parent. The pricing must reflect what an independent third-party developer would charge.
Transfer pricing ensures that profits are allocated based on value creation across jurisdictions.
The Indian entity is compensated using cost-plus(e.g,15%),validated through benchmarking, an essential principle in transfer pricing in Hyderabad engagements for multinational IT firms.
Transfer pricing refers to the pricing of transactions between associated enterprises located in different tax jurisdictions.
Avoid tax disputes and adjustments
Ensure compliance with Indian TP regulations
Prevent double taxation
Improve global tax efficiency
Strengthen audit defence
Adjustments under Section 173 can significantly increase taxable income if pricing is not at arm’s length, making expert-led transfer pricing in Hyderabad support critical for risk mitigation.
Comparable uncontrolled pricing (CUP)
Resale Price method (RPM)
Cost Plus Method
Transaction Net Margin Method - TNMM (most used in IT/ITES)
Profit Split (for IP-heavy models)
Sections 171 & 172
A robust TP documentation framework is the backbone of compliance and audit defence.
This is the core of transfer pricing. We evaluate:
(e.g., coding, testing, project management in IT companies)
(e.g., human capital, infrastructure, proprietary tools)
(e.g., market risk, credit risk, IP risk)
Example:
A captive IT service provider in India performs routine development functions and assumes low risk, justifying a stable cost-plus return.
For most IT companies, TNMM (Transactional Net Margin Method) is applied. We compute:
Indian entity cost = ₹100 crore
Arm’s length margin = 15%
Required revenue = ₹115 crore
If actual margin is lower → TP adjustment risk.
To reduce litigation, the government prescribes minimum margins for certain categories through Safe Harbour Rules under Rule 10TD (updated via Budget 2026 alignment):
Indicative Safe Harbour Margins (IT Sector):
Eligible entities must:
This includes:
An Indian entity is required to file Form 56 (Part B) if:
Part A of Form 56 is required to be filed by all constituent entities of an international group, irrespective of thresholds.
We deliver end-to-end transfer pricing in Hyderabad for multinational IT companies:
Documentation (Local File, Master File) as Transfer Pricing Study Report
Transfer Pricing Benchmarking studies
Transfer pricing clearance, Advisory & structuring
Transfer Pricing Compliance & filings (Form 48,56)
Transfer pricing Litigation & Representation support
Strong experience with multinational IT & SaaS companies
Deep expertise in FAR analysis & benchmarking.
Practical insights on Safe Harbour vs Audit approach
Litigation-ready documentation
Entities entering into international transactions under Section 92B, especially multinational IT companies.
Sections 442 / 457
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