Future of Transfer Pricing in India: Key 2025 Trends Revealed
Introduction to Future of Transfer Pricing in India
Transfer pricing is no longer just a compliance requirement—it’s quickly becoming a strategic tool in global and Indian tax landscapes. With the OECD’s July 2025 updates, the rollout of Amount B, and emerging regulatory shifts, the future of transfer pricing is being reshaped by transparency demands, data-driven enforcement, and technological transformation. For Indian finance professionals and CA students, staying informed about these changes is essential to staying relevant.
Let’s explore the key global and India-specific trends that will define transfer pricing in 2025 and beyond.
Why 2025 Is Crucial for Transfer Pricing Globally
OECD’s New Country Profiles & Amount B Updates
In July 2025, the OECD released its second batch of updated transfer pricing country profiles, covering 78 jurisdictions. These updates emphasize two critical areas: hard-to-value intangibles and the introduction of Amount B, a framework that simplifies pricing for baseline marketing and distribution functions.
Amount B aims to reduce disputes and compliance burdens, providing clearer guidelines and more predictable outcomes—especially for developing economies. For Indian multinationals, understanding how Amount B applies globally is key to adjusting documentation and policy frameworks accordingly.
Pillar Two Rollout and Global Minimum Tax Impact
The ongoing rollout of Pillar Two—a global 15% minimum tax—continues to reshape cross-border tax strategies. This is pushing MNEs to rethink profit allocation mechanisms and assess the interplay between global tax alignment and local TP policies. Countries are tightening enforcement to prevent base erosion, making transfer pricing central to compliance strategies.
Tech-Driven Compliance, AI, Automation, and Blockchain
Transfer pricing is becoming increasingly data-intensive. AI, automation, and blockchain technologies are driving a shift from manual documentation to real-time compliance and risk analytics. AI tools can simulate arm’s length scenarios, flag anomalies, and reduce turnaround time for documentation and audits.
Global firms are leveraging these tools not just to comply—but to unlock insights that optimize supply chains, tax strategy, and pricing policies across jurisdictions.
India’s Emerging Transfer Pricing Landscape
Regulatory Tightening & Documentation Demands
India is expected to enhance its TP regulations with more robust documentation requirements, granular disclosures, and closer scrutiny of high-risk transactions. The expansion of safe harbour provisions and enhanced use of data analytics by the CBDT signal a move toward tech-integrated tax enforcement.
Firms that fail to align with evolving benchmarks may face audits, penalties, or litigation. Hence, proactive policy review and documentation upgrades are no longer optional.
Dispute Resolution Trends: APAs, Compliance Costs, TPO Capacity
A 2025 white paper found that compliance costs for MNEs in India rose by nearly 25% post‑2023 amendments. While Advance Pricing Agreements (APAs) resolved over 80% of disputes within two years, they remain underutilized—only 10% of Indian MNEs currently apply AI in TP strategy, revealing a large opportunity gap.
India’s transfer pricing ecosystem also faces resource constraints. With just ~300 Transfer Pricing Officers managing over 40,000 MNE cases, delays are common. Experts recommend scaling the TPO workforce and piloting AI-assisted TP audits by 2026.
Rise of GCCs as Tax and TP Hubs
India’s Global Capability Centres (GCCs) have emerged as strategic players in managing transfer pricing. As of 2025, 76% of GCCs in India now handle cross-border tax operations, including TP compliance, benchmarking, and reporting.
This reflects growing global confidence in India’s skilled tax workforce, and marks a shift in how multinational firms structure their TP functions—with India as a centre of excellence.
Strategy Shifts: From Compliance to Value Creation
Strategic TP Aligning with Business Goals
Rather than viewing transfer pricing as a reactive compliance activity, firms are integrating it with broader business strategy. This includes aligning pricing models with value drivers, optimizing IP structures, and assessing global tax footprints for efficiency and sustainability.
This evolution is especially relevant for Indian MNEs aiming to expand operations abroad or attract foreign investment.
Leveraging AI and Real-Time Data for TP Efficiency
As documentation becomes more complex, Indian firms must adopt AI and analytics to reduce human error, lower costs, and enable faster compliance. Real-time benchmarking, anomaly detection, and scenario modeling can transform TP from a defensive tool into a proactive one.
Yet, uptake remains low. For professionals, up-skilling in TP tech tools and interpreting AI outputs will be essential in the coming years.
Safe Harbour and Simplified Rules Adoption
India is expected to revise and possibly expand its safe harbour rules to align with global best practices, including elements from Amount B. Simplified methods for low-risk transactions can lower audit risk and reduce compliance friction.
Companies engaging in routine distribution or service functions should explore whether safe harbour provisions or simplified approaches can enhance compliance predictability.
Actionable Steps for Finance Professionals
Up-Skilling in AI and TP Tech Tools
With the shift toward automation and analytics, finance professionals must go beyond traditional accounting skills. Courses in data analytics, TP software, and regulatory technology (RegTech) can improve employability and advisory capacity.
Engaging Proactively in APA Programs
Despite their high success rate, APAs remain underutilized in India. Professionals should advocate for APA use, help prepare robust submissions, and work with legal teams to reduce uncertainty for their firms.
Strengthening Documentation and APA Readiness
Audit readiness now includes more than basic documentation. Professionals must maintain contemporaneous records, conduct regular risk reviews, and track intercompany pricing changes. Proper documentation remains the best defense against scrutiny.
Monitoring OECD and CBDT Updates Continually
As global standards evolve rapidly, staying current with OECD, CBDT, and DTAAs is essential. Regular review of country profiles, circulars, and policy papers should become a part of every finance professional’s workflow.
Key Takeaways for 2025 and Beyond
Transfer pricing in 2025 is defined by proactive strategy, not passive compliance.
Global reforms like Amount B and Pillar Two demand clarity and readiness.
In India, documentation expectations and audit intensity are rising.
AI, automation, and GCCs are reshaping how TP is managed and delivered.
Finance professionals must evolve—tech fluency and global awareness are no longer optional.