India market entry
Transfer Pricing: What an Indian Subsidiary’s Finance Team Should Organise
A practical records and process overview for recurring transactions with an overseas parent or group entities.
In brief
An Indian subsidiary’s finance team should identify related parties, map recurring international transactions, retain agreements and invoices, reconcile intercompany balances, support the pricing policy and maintain a reporting calendar. Specific transfer-pricing positions and documentation requirements require advice based on current law and the actual transactions.
Maintain a related-party and transaction register
The finance team should be able to identify each group counterparty and the nature, value, currency and business purpose of transactions.
- List service, royalty, loan, cost-allocation and goods transactions.
- Map each transaction to an agreement, invoice and accounting code.
- Reconcile the register with ledger and financial-statement information.
Connect policy to actual invoices
The documented group policy should be reflected consistently in contracts, calculations, invoices, tax treatment and accounting entries.
- Validate allocation keys and supporting calculations.
- Review indirect-tax, withholding and foreign-exchange dependencies.
- Escalate unusual or non-routine transactions before period-end.
Reconcile intercompany balances monthly
Differences between group entities can delay closing and weaken the evidence supporting year-end positions.
- Confirm invoices, credits, payments and currency differences.
- Resolve ageing and unmatched items with the overseas counterparty.
- Maintain balance confirmations and reconciliation evidence.
Plan documentation before year-end
Required reports, records and professional analysis should not begin only after the financial year closes.
- Maintain a transaction and document calendar.
- Identify material changes in functions, assets and risks.
- Coordinate finance, tax and overseas-group information owners.
Official references
Use current primary sources when evaluating a live requirement. Portal procedures, regulations and professional guidance change.