With the introduction of the draft Income‑tax Act, 2025, India’s Transfer Pricing reporting framework is undergoing a significant shift. The proposed Form 48 represents a move away from the narrative‑driven design of Form 3CEB and toward a more structured, data‑rich compliance architecture. For tax professionals, the change is not merely a redesign of the form—it is a shift in how data must be captured, validated, benchmarked, and ultimately disclosed.

This article provides a practical, comparative analysis of Form 48 and Form 3CEB, highlighting structural differences, expanded content requirements, technical nuances, and the compliance implications taxpayers must prepare for.

 

1. Understanding the Shift: Form 48 vs. Form 3CEB

Form 3CEB (Current)

Form 3CEB is a relatively concise report accompanied by an annexure. It follows a questionnaire‑style layout, requiring disclosures for each category of international and specified domestic transactions. These include:

• Tangible property
• Intangibles
• Services
• Financing, guarantees, marketable securities
• Cost‑sharing arrangements
• Business restructuring
• Residual categories (such as “any other” transactions)

Form 3CEB captures the method used, book values, ALP figures, and confirmation of documentation. However, it does not require taxpayers to display underlying computations such as comparable counts, percentiles, or adjustment workings. These remain part of the TP study, not the form.

Form 48 (Proposed)

Form 48 retains the same broad coverage but completely restructures how information is captured. It introduces:

• A data‑model‑driven structure with IDs, dropdown lists, and automated totals
• Part E, which requires method‑specific ALP computation panels
• Part F, which asks for documentation maintenance confirmation
• New schedules for cost and revenue elements that are commonly disputed (ESOPs, AE‑provided tools, secondments, forex income, subsidies, and similar items)

In essence, Form 48 shifts ALP computation into the form itself, making disclosures significantly more detailed and transparent.

 

2. Structural Comparison: A Practical Walkthrough

Legal Framework
 Form 3CEB operates under Section 92E and Rule 10E of the 1961 Act.
 Form 48 aligns with Section 172 of the draft Act and expands reporting into six distinct parts (A to F).

Master Data Setup
 Form 3CEB allows free‑text AE entries.
 Form 48 requires AE IDs, Person IDs, PAN/TIN details, jurisdiction, and relationship codes. This necessitates a clean AE/Person master list with a structured ID schema.

Transaction Capture
 Form 3CEB uses clause‑wise Yes/No responses and book‑vs‑ALP totals.
 Form 48 requires a unique transaction ID for each line, coupled with standardized transaction‑type codes and automated aggregation. This is a shift to line‑item discipline and strengthens reconciliation capabilities.

Deemed International Transactions
 Form 3CEB includes them in a single question.
 Form 48 elevates their importance by requiring a full list of “persons,” followed by detailed capture analogous to direct AE transactions.

Specified Domestic Transactions (SDT)
 Form 3CEB’s SDT disclosures are minimal.
 Form 48’s Part D incorporates SDT with the same ID‑driven mechanics and refers to updated sections in the draft Act (e.g., Sections 122, 140, 205).

ALP Methods and Computations
 In Form 3CEB, taxpayers only state the method and ALP figure.
 In Form 48’s Part E, taxpayers must present method‑wise computational workings, comparable counts, adjustments, and aggregation choices. This eliminates the gap between what the study shows and what the form captures.

APA Reporting
 Form 3CEB includes a one‑line APA question.
 Form 48 links APA coverage directly to transaction IDs, reducing duplication and enabling accurate reconciliation.

Documentation Confirmation
 Form 3CEB does not ask explicitly within the form.
 Form 48 requires confirmation of documentation maintenance and threshold triggers under Section 171/Rule 84.

Cost and Revenue Schedules
 Form 3CEB does not capture these details.
 Form 48’s Schedules 14A/14B require granular reporting of cost and revenue components often questioned by tax authorities.

 

3. Key Content Expansions in Form 48

3.1 Granular Transaction Classification

Intangible transactions are split into specific categories such as marketing, technology, artistic, engineering, contracts, customer‑related intangibles, and others. Services are similarly detailed, including IT, ITeS, KPO, and contract R&D. This requires taxpayers to align contracts, functional analyses, and ledger mapping with the selected transaction subtype.

3.2 Capital Financing Framework

Form 48 structurally separates borrowing and lending transactions, capturing loan types, guarantees, securities, currency details, interest or fee rates, and other financial attributes. This structure improves visibility into intercompany financing and reduces the scope for generic benchmarking rationales.

3.3 Built‑in ALP Computation Logic

Form 48 explicitly ties the ALP statistic to the number of comparables:

• One comparable → its result
• Two to five comparables → arithmetic mean
• Six or more comparables → median, 35th and 65th percentiles

This mirrors current audit practice and demands internal consistency between the TP study and the form.

3.4 Cost and Revenue Lever Schedules

The form requires taxpayers to identify whether specific cost or revenue items were included in the ALP base. These areas—ESOPs, AE‑provided tools, grant income, etc.—often form the basis of audit scrutiny. Explicit disclosure in the form establishes a more transparent starting point for audits.

 

4. What Becomes Less Relevant or Disappears

• Free‑form narratives give way to structured fields, coded lists, and sectional data.
• The flexibility of disclosing only ALP and method is removed; computations must now be visible.
• Silent adjustments in benchmarking analyses will no longer reconcile with the form unless explicitly stated.
• Clause‑based legacy numbering is replaced by schema‑based reporting.

 

5. Technical Nuances Taxpayers Should Note

Comparable Count Alignment
 The count disclosed must match the study; inconsistencies will invite scrutiny.

Currency‑Based Benchmarking
 The financing schedule displays currency and interest rate selections clearly, reducing the acceptability of generic LIBOR‑plus justifications.

Adjustment Transparency
 Any comparability adjustments—capacity, working capital, risk, intangible intensity—must be explicitly reported and quantified.

Deemed ITX Parity
 Form 48 requires full benchmarking and data capture for deemed transactions.

SDT Mapping Under New Sections
 Taxpayers need to revisit SDT triggers based on new statutory references in the draft Act.

 

6. What Remains Consistent

• Core transaction categories are largely unchanged.
• The accountant’s certification remains central.
• The arm’s length principle continues to underpin all disclosures.

The shift lies not in what is reported, but how comprehensively and structurally it must be reported.

 

7. Clause Mapping (Illustrative)

• Form 3CEB clauses B(11)–B(16) map to Form 48’s expanded transaction‑type list with deeper sub‑classifications and method‑wise math.
• Cost‑sharing (3CEB B(17)) corresponds to Form 48 Type 15.
• Business restructuring (3CEB B(18)) aligns with Form 48 Type 14, with added details on agreements and impacts.
• Residual categories (3CEB B(19)) map to Form 48 Type 16.
• Deemed transactions (3CEB B(20)) correspond to Form 48’s Part C with full transaction‑level reporting.
• SDT disclosures shift from 3CEB Part C to Form 48 Part D with updated statutory references.

 

Conclusion

Form 48 represents a significant shift in India’s Transfer Pricing compliance landscape. Reporting moves from narrative‑driven summaries to structured, data‑driven disclosures where ALP computations, adjustments, comparable counts, and cost‑revenue levers are explicitly built into the form.

Tax teams will need to adapt by:

• Establishing clean AE and Person master data
• Adopting transaction ID‑driven reporting
• Ensuring TP study appendices tie seamlessly to form disclosures
• Preparing detailed reconciliations for cost and revenue items
• Re‑evaluating SDT positioning under the new Act

The new framework enhances transparency but also raises compliance expectations. Preparing for this shift early will help taxpayers manage audit risks and streamline reporting when the new form becomes operational.

Hope you had a great reading these insights. In case of any queries, feel free to reach us at +91 8177942281 / or suniteejakhotia@gmail.com