An IT services subsidiary along OMR, set up two years ago as the Indian arm of a US-based parent, had never filed Form 3CEB. The finance team assumed transfer pricing rules only mattered once the company hit a certain revenue scale — it doesn't work that way for international transactions.
There's no minimum value for an international transaction
Unlike specified domestic transactions, which only trigger transfer pricing rules above a prescribed threshold, any international transaction with an associated enterprise — a foreign parent, group company, or related entity — triggers the requirement regardless of value. A subsidiary paying even a modest management fee or royalty to its parent in year one is already within scope.
Why OMR specifically sees this gap
OMR's concentration of IT subsidiaries and startups with foreign investors or parent companies means intercompany transactions — software licensing, management fees, cost allocations — are routine here in a way they aren't for a typical domestic services business. That routineness is exactly why it gets overlooked: it doesn't feel like a special transaction requiring special compliance, even though it is one.
What early compliance actually looks like
Documenting the arm's-length basis for each intercompany transaction from the start — rather than reconstructing it retroactively once the company is larger and the transaction history longer — is meaningfully less work and avoids the penalty exposure that comes with an undocumented history if the transaction pattern is later scrutinised.
If your OMR-based subsidiary has intercompany transactions with a foreign parent and hasn't filed Form 3CEB, C S Rushil & Co. can assess your actual exposure and get documentation in place. Book a free consultation.