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How Section 482 on the US side and India's transfer pricing rules interact once your subsidiary starts transacting with its US parent.
Any transaction between your US parent and its Indian subsidiary — management fees, cost allocations, intercompany services, royalty for IP use — is a related-party transaction on both sides of the border. The IRS reviews it under Section 482 of the Internal Revenue Code; Indian tax authorities review the same transaction under India's own transfer pricing rules — historically Sections 92-92F of the Income Tax Act, 1961, restructured as Sections 161-173 under the Income-tax Act, 2025, which came into effect April 1, 2026. Both require the pricing to reflect an arm's-length standard, but the documentation and filing mechanics differ.
Under the draft Income-tax Rules, 2026 (issued for public consultation by the CBDT under the new Income-tax Act, 2025), Form 3CEB is proposed to be replaced by Form 48 — a more data-rich, structured filing intended to apply from Tax Year 2026-27 onwards. This is still a draft proposal, not yet finalized law, and Form 3CEB remains the operative filing for the current cycle (due October 31, 2026). We're tracking the CBDT's final notification and will apply whichever form number is current at the time of your filing.
The most common issue we see isn't aggressive pricing — it's inconsistency: the number reported to Indian tax authorities under India's transfer pricing rules doesn't match what shows up on Schedule M of the US parent's Form 5471. That mismatch is one of the easiest things for either tax authority to flag. Keeping both filings reconciled to the same underlying figures is the single highest-value thing a joint US-India advisory relationship does for a subsidiary structure.
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