India: Country-by-country reporting, transfer pricing documentation rules in budget 2016

India: Country-by-country reporting

The Union Budget 2016—announced 29 February 2016—includes provisions introducing country-by-country reporting for transfer pricing documentation purposes.

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The measures are based on Action 13 recommendations issued as part of the base erosion and profit shifting (BEPS) project of the Organisation of Economic and Commercial Development and G20 countries. India has proposed to introduce the country-by-country reporting rules pursuant to the OECD’s three-tier transfer pricing documentation approach:

  • Master file
  • Local file
  • County-by-country report

These measures will be effective from Assessment Year 2017-18. 

KPMG observation

While India currently requires the preparation of transfer pricing documentation, such documentation is only required to be prepared by the due date when the return is filed and then is only to be furnished during assessment proceedings, typically a few years later. The country-by-country reporting rules would revise this rule, and require that the documentation must be furnished at the time the return is filed. This fact, coupled with the limited period (eight months) allowed from the end of the financial year (31 March 2017) to prepare such extensive documentation, could pose a challenge for taxpayers preparing this documentation for the first time.


Read a March 2016 report [PDF 300 KB] prepared by the KPMG member firm in India: Budget 2016 – Transfer Pricing Amendments

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