Form 48 Transfer Pricing: What to have ready before you file

India’s transfer pricing certification has changed in ways that go beyond renaming a form. From Tax Year 2026-27, every person with international transactions or specified domestic transactions (SDTs) files Form No. 48 under Section 172 of the Income-tax Act 2025, replacing Form 3CEB which was prescribed under Section 92E of the Income Tax Act 1961. The form is structured, ID-linked, and machine-readable. What was a narrative certification has become a transaction-by-transaction data submission that the system cross-verifies against your tax audit report, your return, and, where applicable, against filings by foreign tax authorities under treaty exchange provisions.

The what-changed question is well-documented. The harder question — what your team needs to have in place before the certifying CA touches the form is what this article addresses.

Does Form 48 replace Form 3CEB entirely, or does Form 3CEB still apply?

Form 3CEB under Rule 10E of the Income Tax Rules 1962 continues to govern filings for FY 2025-26 (AY 2026-27) and all earlier years. The Form 3CEB due date for AY 2026-27 is 30/11/2026. Form No. 48 under Rule 85 of the Income Tax Rules 2026 applies from Tax Year 2026-27 (AY 2027-28) onwards. Both forms will be in simultaneous use during the AY 2026-27 filing season: Form 3CEB for past-year returns, Form 48 preparation for current-year transactions.

The statutory shift: what changes in substance, what does not

The Income-tax Act 2025 recodifies transfer pricing from Chapter X (Sections 92 to 92F) of the 1961 Act to Sections 161 to 173. The section-to-section mapping is:

Subject	Old section (IT Act 1961)	New section (IT Act 2025)
Associated enterprise definition	Section 92A	Section 162(1)
International transactions	Section 92B	Section 163
Specified domestic transactions	Section 92BA	Section 164
Arm’s length price methods	Section 92C	Section 165(1)
TP documentation	Section 92D	Section 171
Accountant’s report	Section 92E	Section 172
Rule for accountant’s report	Rule 10E (IT Rules 1962)	Rule 85 (IT Rules 2026)

Arm’s length pricing principles, the six methods (CUP, RPM, CPM, TNMM, PSM, and any other method), and the interquartile range framework carry forward from the 1961 Act. What changes is disclosure granularity, digital architecture, and two substantive clarifications that affect how Part E is computed.

For the detailed six-part structure of Form 48 and how it feeds into audit risk selection, see Treelife’s transfer pricing audit triggers guide. This article focuses on the three areas that structure guides do not cover: safe harbour interaction, block assessment exposure, and the tolerance band change.

Safe harbour and Form 48: the obligation that does not go away

The most common misconception about safe harbour under the new regime is that opting in removes the Form 48 filing requirement. It does not.

Section 167 of the Income-tax Act 2025, which replaces Section 92CB of the 1961 Act, defines safe harbour as circumstances in which tax authorities accept the declared transfer price without requiring a full ALP determination. The safe harbour rules under the Income Tax Rules 2026 have been expanded and recalibrated for Tax Year 2026-27 onwards, with revised margin bands for IT services, ITeS, KPO, contract R&D, data centres, and bonded warehouse operations.

But Sections 171 and 172 apply irrespective of whether safe harbour is exercised. This means:

• The contemporaneous TP documentation (local file under Rule 84) must still be maintained for all international transactions, including those covered by safe harbour.
• Form 48 must still be filed for all international transactions, including those for which safe harbour margins are claimed.
• The safe harbour margin and the transaction details must be disclosed in Form 48. The TPO will not dispute the pricing for safe harbour-eligible transactions, but the form entry is still required.

The separate application form for safe harbour Form 49 for IT service providers under Rule 91, and the form under Rule 90 for all other eligible transactions is filed in addition to Form 48, not instead of it. Confusing the two is a compliance failure that surfaces only at the point of assessment.

Revised safe harbour margins for Tax Year 2026-27 (Rule 85 and Finance Act 2026 amendments):

Eligible transaction category	Margin / rate
IT services (software development)	15.5% of operating cost
IT-enabled services (ITeS)	15.5% of operating cost
Knowledge process outsourcing (KPO)	18% of operating cost
Contract R&D (software)	25% of operating cost
Contract R&D (generic pharmaceuticals)	25% of operating cost
Data centre services	15% of cost
Bonded warehouse component operations	2% of invoice value
Intra-group loans	RBI reference rate (PLR + 150 bps for foreign currency)
Corporate guarantees	1% of the amount guaranteed

These margins apply for a three-year block commencing from Tax Year 2026-27 unless modified by CBDT. Verify the margin band against the notified rules before relying on them, as sub-category eligibility conditions apply. Transactions with AEs in notified low-tax jurisdictions under Section 176 are excluded from safe harbour regardless of margin.

Treelife advises on safe harbour eligibility assessment, margin band confirmation, and coordinated filing of Form 49 and Form 48. See our transfer pricing advisory services.

Block transfer pricing assessments: what Transaction IDs mean across years

The Income Tax Rules 2026 introduce block transfer pricing assessments as a new procedural mechanism. A block assessment covers multiple tax years in a single proceeding. This is designed to reduce repeat scrutiny of the same transaction structures across successive years.

The practical effect runs in both directions. For a company with clean, well-documented TP positions, a block assessment means fewer separate audit cycles. For a company with a weak or evolving TP position, it means an adverse finding in one year can be extrapolated across the block period.

Form 48’s Transaction ID architecture is the mechanism that makes block assessments viable. Because every transaction stream has a persistent identifier (T-1, T-2, and so on) linked to a specific AE and transaction type, the department can track the same transaction across Tax Year 2026-27, 2027-28, and 2028-29 without reconstructing the structure. A change in method, a change in comparable set, or a change in the benchmarked margin that is not adequately explained in the documentation will be visible at the block level.

What this means for filing preparation:

• Year-on-year consistency in Transaction IDs and AE IDs matters. A transaction that was T-1 in the first Form 48 should not become a different transaction in Year 2 unless the underlying intercompany structure has changed.
• Changes in benchmarking approach between years need to be documented. An unexplained shift from TNMM to CPM, or a reduction in the number of comparables, will appear as a data anomaly across the block.
• The Transaction Master Register (an internal ledger assigning unique IDs to every intercompany transaction stream) should be maintained from the first Form 48 filing and updated quarterly, not reconstructed annually.

Block assessments also interact with APAs. An APA acknowledgement number entered in Row 8 of Part C maps a covered transaction out of Part E for that year. If the APA expires or is terminated during the block period, the transition back to benchmarked pricing must be reflected cleanly in the subsequent Form 48 without creating an unexplained gap.

The Section 167 tolerance band clarification

The Income-tax Act 2025 resolves a question that was actively litigated under the old Section 92C: does the tolerance band apply when there is only one comparable?

Under the old regime, Section 92C(2) allowed a 3% variation (or 1% for wholesale trading) from the arithmetic mean of arm’s length prices. There was sustained dispute about whether the band applied where only a single comparable existed, with some tribunals holding it did not because there was no “range” to speak of. The matter created real exposure for companies in niche transaction categories with thin comparable databases.

Section 167 of the Income-tax Act 2025 expressly confirms that the tolerance band applies in all cases, including where a single comparable is used. The computation illustration from the Income Tax Department’s Form 48 FAQ confirms this: where one comparable exists, the comparable’s own margin is the arithmetic mean, and the tolerance band applies directly to it.

The impact on Part E is concrete:

• A company with one comparable at 22% gross margin, claiming 3% tolerance, has an arm’s length range of 21.34% to 22.66% (i.e., the comparable minus and plus 3% of the comparable’s value). Transactions priced within this band do not require adjustment.
• Under the old contested interpretation, the same company faced the argument that the band did not apply, requiring the price to exactly match the single comparable.
• The Section 167 clarification should be documented in the TP study and reflected in the Part E computation entered in Form 48. A company that has been operating under the conservative assumption should now revisit whether prior-year ALP adjustments were necessary.

This matters most for companies in specialised service categories (specific intangible licensing, niche financial instruments, unique manufacturing arrangements) where database searches routinely return one or two comparables.

What the certifying CA must now independently verify

The scope of a CA’s certification liability has expanded materially under Form 48 compared to Form 3CEB. The formal obligations under Section 172 are the same certify that international transactions have been priced at arm’s length but the form architecture means the CA is now certifying specific data points, not narrative descriptions.

Under Form 3CEB: The CA certified the method selected, the aggregate transaction value, and the arm’s length price range. The underlying benchmarking study, comparables, and interquartile range were in the TP documentation file that the CA reviewed but did not reproduce in the form.

Under Form 48: The CA must verify that:

• AE IDs and Person IDs are correctly assigned and consistent with the relationship codes under Section 162(1)
• Transaction IDs match the correct AE and transaction type combinations
• Part E entries — number of comparables, margin or mark-up for each comparable, arithmetic mean or median, tolerance band applied, computed ALP, and adjustment if any are arithmetically correct and match the TP study
• APA transactions in Row 8 of Part C correspond to actual agreements with correct acknowledgement numbers
• Part B auto-populated totals reconcile with the financial statements and the tax audit report
• Note 14 cost and expense disclosures are complete, including items like parent-borne stock option costs and shared service allocations that may not appear in the Indian subsidiary’s own books

A mismatch between Form 48, the tax audit report, and the financial statements will be detected automatically. The CA should not certify Form 48 without running a reconciliation across all three. In practice, this means the CA needs the TP study, the audited financials, the tax audit report draft, and the intercompany cost allocation data from the parent entity to be ready before Form 48 is opened.

Filing readiness: what to have in place before October 2026

Table: Form 48 pre-filing readiness checklist

Area	Action	When
Transaction Master Register	Build or update register with AE IDs, Person IDs, and Transaction IDs for all FY 2026-27 intercompany flows	By June 2026
TP study	Commission or update for Tax Year 2026-27 with transaction-specific benchmarking for each Transaction ID	By August 2026
Safe harbour assessment	Confirm eligibility and revised margin band applicability; prepare Form 49 application if IT services	By July 2026
APA mapping	Confirm which transactions are APA-covered; extract acknowledgement numbers, dates, and coverage extent for Row 8	By August 2026
Note 14 data from parent	Issue formal data request to parent for cost allocations, stock option charges, and shared service costs not in Indian books	By April 2026
Reconciliation draft	Cross-reference Part B auto-populated totals against financials and draft tax audit report	By September 2026
CA briefing	Brief certifying CA on all of the above before any form entry begins	By September 2026
Form 48 submission	File on e-filing portal before due date	By 31/10/2026

Common mistakes that create post-filing exposure

Not requesting Note 14 data from the parent in time. Cost allocations, parent-borne ESOP charges, and shared service costs that are recharged to the Indian entity often exist only in the parent’s books. These must be disclosed in Form 48. If the parent does not provide the data before filing, the disclosure is incomplete. Issue the data request at the start of the financial year, not in September.

Using the same method for aggregated and standalone benchmarking without explanation. If a transaction is partly aggregated with other transactions and partly benchmarked on a standalone basis, both approaches must be reflected in Part E. The system provides for this, but many TP studies do not document the split clearly enough for the CA to enter the data correctly.

Changing the comparable set without a documented rationale. Block assessment visibility means a reduction in the number of comparables between Year 1 and Year 2 of Form 48 will appear as an anomaly. If the change is justified (a comparable was delisted, acquired, or became functionally dissimilar), document it in the TP study.

Filing Form 48 before the TP study is complete. Part E requires actual benchmarking data. Filing with estimated or placeholder entries creates a mismatch that will surface if the final TP study differs from what was entered. The form must reflect the completed study.

Assuming safe harbour removes all documentation and filing obligations. As set out above, it does not. Form 48 and the local file under Rule 84 are mandatory even for safe harbour-covered transactions.

Treelife practitioner note

In the Form 48 preparation work we have run at Treelife across Indian subsidiaries of US, UK, and Singapore-headquartered groups, the single most common structural failure is the absence of a Transaction Master Register. Companies that have been filing Form 3CEB for several years have typically reported transactions at an aggregate level by broad type: technology services, management fees, royalties. Form 48 requires the same transactions to be disaggregated to the AE-and-transaction-type level, assigned stable identifiers, and benchmarked separately where the functions and risks differ.

The companies that go into the October 2026 filing window most exposed are those with omnibus intercompany fee arrangements a single services fee that bundles software licences, cloud infrastructure recharges, technical support, and data access without documented sub-classification. Under Form 3CEB, that bundle was reported as one transaction. Under Form 48, each sub-category is a separate Transaction ID with its own Part E entry. Unbundling that at year-end, without prior-period documentation of what the components are and how they are priced, is expensive.

The second pattern we have seen is companies that opted into safe harbour in prior years under the old Rule 10TD regime and assumed the same opt-in mechanics continue. The new Rules 90 and 91 have different eligibility conditions, different forms (Form 49 for IT services), and a three-year block structure. Companies need to re-evaluate eligibility under the new rules and confirm that the revised margin bands cover their actual operating profit margins before relying on safe harbour for Tax Year 2026-27.

FAQs

Q: Who must file Form 48?
A: Every person who has entered into any international transaction or specified domestic transaction during Tax Year 2026-27 must obtain a Form 48 certification from a chartered accountant and file it on the Income Tax e-filing portal. There is no minimum transaction value threshold for international transactions. Form 48 can only be filed online; no offline submission is permitted.

Q: What is the due date for Form 48?
A: Form 48 must be filed on or before one month before the due date for furnishing the income tax return under Section 263(1) of the Income-tax Act 2025. For companies with international transactions, the ITR due date is 30/11/2026 for AY 2027-28, making the Form 48 due date 31/10/2026. Confirm against CBDT extension circulars issued closer to the deadline.

Q: What is the penalty for not filing Form 48?
A: Failure to furnish the accountant’s report under Section 172 attracts a penalty of ₹1,00,000. In addition, if the failure results in a TP adjustment, the underreported income carries a further penalty of 50% of the additional tax computed on the adjustment. Failure to maintain TP documentation under Section 171 attracts 2% of the value of each international transaction for which documentation was not maintained.

Q: If I opt into safe harbour, do I still need to file Form 48?
A: Yes. Safe harbour under Section 167 removes ALP litigation risk for eligible transactions, but Sections 171 and 172 apply regardless. Form 48 must be filed for all international transactions, including those for which safe harbour margins are claimed. Form 49 (the safe harbour application) is filed separately.

Q: Does Form 48 replace the transfer pricing study?
A: No. The TP study (local file maintained under Section 171 read with Rule 84) is a separate document that must be prepared and retained. Form 48 is the accountant’s certification. Part F requires the taxpayer to confirm explicitly that TP documentation has been maintained, making this confirmation a statutory obligation rather than an implicit one.

Q: How does the Section 167 tolerance band work if I only have one comparable?
A: The Income-tax Act 2025 resolves the previously contested position. The 3% tolerance band (1% for wholesale trading) applies even where there is only one comparable. The comparable’s own margin is treated as the arithmetic mean, and the tolerance band is applied directly to it. Document this position in the TP study and reflect it in the Part E computation.

Q: What is a block transfer pricing assessment and how does Form 48 create exposure?
A: Block TP assessments allow the department to scrutinise multiple tax years in a single proceeding. Form 48’s Transaction ID architecture makes year-on-year tracking automatic. Unexplained changes in benchmarking method, comparable set, or margin between successive Form 48 filings will be visible at the block level and can form the basis for a block adjustment.

Q: What is APA mapping in Form 48 and why does it matter?
A: Transactions covered by an Advance Pricing Agreement (APA) must be disclosed in Row 8 of Part C of Form 48 with the APA date, acknowledgement number, and coverage extent. These transactions are excluded from Part E (ALP computation). Failing to map APA transactions means the system may flag missing Part E entries for those transactions, creating an apparent compliance gap.

Q: What is Note 14 and why does it require data from the parent?
A: Note 14 covers cost and expense disclosures for certain transaction categories, including parent-borne stock option costs, allocated shared service costs, and charges not recorded in the Indian subsidiary’s own books. This data typically resides with the parent entity and must be formally requested at the start of the compliance season. Filing without complete Note 14 data produces an incomplete disclosure that a certifying CA should not sign.

Q: Does Form 48 apply for Tax Year 2025-26 (AY 2026-27) returns due in November 2026?
A: No. AY 2026-27 returns are filed under the Income-tax Act 1961 using Form 3CEB. The Form 3CEB due date for AY 2026-27 is 30/11/2026. Form 48 applies from Tax Year 2026-27 (AY 2027-28) onwards.

Q: Can data from Form 48 be shared with foreign tax authorities?
A: Yes. CBDT has confirmed that Form 48 data can be cross-verified with other filings and may be shared with foreign tax authorities under applicable tax treaty exchange-of-information provisions. This is a material change from Form 3CEB, which sat in a national silo.

Q: How do deemed international transactions appear in Form 48?
A: Deemed international transactions (transactions considered international by virtue of a prior arrangement involving a third party, under Section 163 of the IT Act 2025) are reported in Part C of Form 48 under a separate sub-section. The third-party counterparty is assigned a Person ID (P-1, P-2, and so on), distinct from AE IDs. These were often underdisclosed in Form 3CEB and require careful identification before Form 48 is completed.

Q: For investors reviewing a target company, what does Form 48 change in TP diligence?
A: From AY 2027-28 onwards, TP diligence will include Form 48 filings in addition to Form 3CEB for earlier years. Form 48’s transaction-level data makes it easier to identify undisclosed transaction streams, gaps in APA mapping, and benchmarking methodology inconsistencies. Any open TP exposure can affect deal valuation or trigger indemnity clauses in the SPA. Buyers should request Form 48 alongside the TP study during due diligence.

Regulatory references:

• Section 172, Income-tax Act 2025 (accountant’s report obligation)
• Section 171, Income-tax Act 2025 (documentation requirements)
• Section 167, Income-tax Act 2025 (safe harbour — replaces Section 92CB of IT Act 1961)
• Section 162(1) and 162(2), Income-tax Act 2025 (associated enterprise definition)
• Section 163, Income-tax Act 2025 (international transactions)