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Tolerance Band Notification
For AY 2024-25, the transfer pricing tolerance band is set at 1% for wholesale trading and 3% for other international transactions. This provides certainty and reduces audit risk.
Power to Revise TP Orders
Clarified under Section 263, the Commissioner may revise Assessment Officer orders if transfer pricing instructions from the TPO are not followed. However, direct revision of TPO orders by the Commissioner is generally not permitted.
Alignment with OECD Transfer Pricing Guidelines 2022
India references and adapts the 2022 OECD Transfer Pricing Guidelines, especially for profit split method, financial transactions, and hard-to-value intangibles.
BEPS Pillar 2 (15% Global Minimum Tax) Preparations
India signals intent to adopt the OECD's Pillar-2 regime, promising a 15% minimum effective tax for large multinational enterprises in step with global standards.
Master File, Local File, CbC Reporting Deadlines
CBDT's compliance calendar for FY2024-25: - TP audit (Form 3CEB): Oct 31, 2025 - Transfer pricing documentation: Oct 2025 - Master File: Nov 30, 2025 - CbC reporting: Mar 31, 2026 (if applicable)
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Key TP Challenges for Global Capability Centres (GCCs)
No direct CBDT notification, but the official documentation framework and safe harbour expansion address concerns around benchmarking, cost allocation, and value chains relevant for Indian GCCs.
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Advanced Pricing Agreements: Expanded Framework
Taxpayers can seek unilateral, bilateral, or multilateral APAs under Articles 31-ter and 31-quater of Presidential Decree 600/1973, with the aim of reducing disputes and providing certainty over multi-year transfer pricing positions. Procedures are coordinated with the latest OECD BEPS recommendations.
BEPS Pillar 2 & Hybrids: New Compliance Standards
Italy is introducing new requirements aligned with OECD BEPS Pillar 2---a minimum 15% tax and anti-hybrid mismatch provisions. Enhanced documentation obligations for these areas apply for the first time in June 2025.
"Best Method" Principle Clarified
Italy's Supreme Court (2024, Case No. 26432) reaffirmed that the most reliable method should be applied, consistent with OECD standards. While all OECD methods are accepted (CUP, Resale Price, Cost Plus, TNMM, Profit Split), traditional methods generally receive priority if they provide comparable reliability.
Direct Implementation of OECD Guidance
Italy's approach to transfer pricing in 2025 is firmly based on Art. 110(7) of the Italian Income Tax Code and incorporates the full arm's length principle, taking direct reference from the 2022 OECD Guidelines. All transfer pricing arrangements between associated enterprises must reflect market terms as independent parties would agree.
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