Benchmarking Analysis the comparable search that decides the arm's length range.
Specialist benchmarking studies for transfer pricing — comparable search on ProwessIQ, Capitaline, Royaltystat, and global databases, with qualitative screening, financial adjustments, and an arm's length range under Rule 10B.
Benchmarking is the analytical heart of any transfer pricing study. Once the ALP method is chosen — usually TNMM, RPM, or CPM — the next step is to find comparable independent companies, screen them, compute their margins, and derive an arm's length range against which the taxpayer's related-party margin is tested.
The quality of the benchmarking determines whether a TP adjustment will be made or not. A weak comparable set is the first thing a TPO targets — comparables in different industries, those with related-party transactions, persistent loss-makers, and entities with disproportionate intangibles or assets get rejected, often shifting the median significantly.
We run benchmarking on ProwessIQ, Capitaline, Royaltystat (for royalty / FTS), Loan Connector (for intra-group loans), and global databases for offshore comparable searches. Each search is documented step-by-step — search strategy, quantitative filters, qualitative review, financial adjustments, and final comparable set.
Our Benchmarking Analysis Services
ProwessIQ / Capitaline Search
Domestic benchmarking on ProwessIQ and Capitaline databases.
Global Benchmarking
International benchmarking on global databases for offshore comparables.
Royalty / FTS Benchmarking
Royaltystat-based benchmarking of royalty and FTS transactions.
Intra-Group Loan Benchmarking
Loan Connector and Reuters-based benchmarking of intra-group loans.
Qualitative Screening
Review of annual reports for functional, asset, and risk comparability.
Financial Adjustments
Working capital, capacity, and other adjustments to enhance comparability.
Multi-Year Data
Multiple-year data analysis under proviso to Rule 10B(4).
Documentation
Step-by-step documentation of search strategy and conclusions.
Our Approach
Tested Party & PLI
Tested party identified and profit level indicator finalised.
Search Strategy
Database selection, keywords, NIC / NAICS codes, and filters defined.
Quantitative Filters
Turnover, persistent loss, related-party, and other filters applied.
Qualitative Review
Annual reports reviewed and unsuitable comparables eliminated.
Range & Conclusion
Arm's length range computed and arm's length conclusion drawn.
Why It Matters
Frequently Asked Questions
Comparison of related-party transaction margins with comparable independent transactions to test arm's length.
ProwessIQ and Capitaline are the most commonly used domestic databases.
The 35th to 65th percentile range of comparable margins under Rule 10CA.
Yes, weighted average margins of three years are generally used.
Working capital, capacity, and risk adjustments to improve comparability with the tested party.
Need a Defendable Comparable Set?
Get benchmarking done the right way — documented search strategy, qualitative screening, financial adjustments, and an arm's length range that holds up in assessment.
Run My Benchmarking or call +91 9819 000 511