The short answer
- Every transaction between the Indian parent and the Singapore company must be priced at arm's length, on both sides.
- Singapore documentation is mandatory when revenue exceeds S$10 million and related party transactions exceed set thresholds.
- From YA2026 the threshold for services and other categories doubled from S$1 million to S$2 million. Goods and loans stay at S$15 million.
- One agreement, one benchmarking set and the same descriptions in both countries keep you consistent.
Once an Indian parent and a Singapore subsidiary trade with each other, every invoice between them has a tax authority on each end. Both expect the price to be what independent parties would agree: the arm's length principle. The aim is simple to state. Price each flow once, document it once, and describe it the same way in both countries.
When Singapore documentation is mandatory
- Gross revenue above S$10 million for the year (or documentation was required the year before), and
- Related party transactions above the thresholds: S$15 million for goods, S$15 million for loans, and S$2 million for each other category from YA2026 (S$1 million before).
Below the thresholds, documentation is not mandatory, but the arm's length rule still applies and IRAS can still adjust. A short file with the agreement, the pricing basis and the calculation is cheap insurance.
Separately, a company whose related party transactions exceed S$15 million in the year files a related party transactions form with its tax return.
Timing and penalties
- Prepared by the tax return filing date for the year
- Produced within 30 days if IRAS asks
- Kept for at least five years
- Fine up to S$10,000 for not preparing it, and a 5% surcharge on any adjustment IRAS makes
Singapore's safe harbours
- Routine support services (accounting, HR, IT support and similar back-office work listed by IRAS) can be charged at cost plus 5%, which IRAS accepts without a benchmarking study.
- Related party loans up to S$15 million can use IRAS's published indicative margin over a base rate, instead of a full analysis.
Both help on the Singapore side only. India applies its own rules to the same transaction, and a 5% mark-up on services provided by an Indian team will usually be too low for Indian purposes.
India side
For the Indian parent these are international transactions. It files an accountant's report on them each year, keeps its own documentation above the Indian thresholds, and larger groups add the master file and country-by-country report: see CbCR, master file and Pillar Two. India also offers safe harbour rules for some categories and advance pricing agreements, including bilateral ones with Singapore.
A common case: an Indian team serving the Singapore company
A Singapore company sells software subscriptions in Southeast Asia. Its developers and support staff sit in the Indian parent. The usual structure is a services agreement under which India charges Singapore its costs plus a mark-up supported by a benchmark of comparable service providers. Singapore keeps the residual profit for the market risk it bears. The questions each side will ask:
| Question | Singapore asks | India asks |
|---|---|---|
| Was the service provided? | Evidence of benefit to the Singapore company | Evidence of the work done |
| Is the mark-up right? | Not too high, given the safe harbour | Not too low, given Indian benchmarks |
| Who owns the software? | Whether Singapore should pay a royalty instead | Whether India should earn more than cost plus |
| Were invoices settled? | Unpaid balances become loans needing interest | Unpaid receivables raise interest adjustments |
Common intercompany flows and what to watch
| Flow | Watch |
|---|---|
| Management fees from Singapore to India (or the reverse) | Evidence the services were rendered and benefit the payer. Avoid duplicate charges |
| Intercompany loans | Interest at an arm's length rate. Unpaid balances drift into loans |
| IT and back office services from India | Cost plus a mark-up, supported by a benchmark |
| Royalties for brand or technology | Who owns the intangible, and who develops it |
Keep both sides consistent
- Sign the intercompany agreement before the year starts
- Use one benchmarking set and the same transaction descriptions in both countries
- Invoice and settle on time, at least quarterly
- True up to the agreed margin before the year end, not after the tax return
- Align the year end where you can: see choosing the year end
The transfer pricing threshold checker tells you whether Singapore documentation is mandatory for your figures.
Questions people ask
When is Singapore transfer pricing documentation mandatory?
When gross revenue exceeds S$10 million and related party transactions exceed the thresholds: S$15 million for goods and for loans, and S$2 million for each other category from YA2026.
What is the penalty for not preparing it?
A fine of up to S$10,000, and a 5% surcharge on any transfer pricing adjustment IRAS makes.
Is cost plus 5% acceptable for services from India?
Singapore accepts cost plus 5% for routine support services. India applies its own benchmarks to the Indian service provider, and will often expect a higher mark-up, so price for both sides.
Talk it through with an adviser
Tell us your structure and deadlines. We reply with what applies to you and a fixed-fee proposal.
Sources
- IRAS: Transfer pricing
- Crowe Singapore: Mandatory transfer pricing documentation (secondary source)
- Treelife: Master file and CbCR in India, old and new forms (secondary source)
General information only, last reviewed 11 November 2026. It is not advice for your situation. Laws and practice change, and the official sources linked above prevail. Speak to a qualified adviser before you act. Northwise does not file with Indian authorities; India-side work is done by independent licensed firms.
