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A Intercompany Agreement sets out the terms and conditions for business dealings between related companies within the same corporate group in India. It creates clear rules for sharing resources, transferring goods, providing services, and handling financial transactions between affiliated entities.

These agreements help companies comply with Indian transfer pricing regulations under the Income Tax Act and prevent tax disputes. They document fair market pricing, establish responsibility chains, and protect both parties' interests while ensuring transparent corporate governance. Indian tax authorities often scrutinize these agreements during audits to verify that related-party transactions follow arm's length principles.

Set up an Intercompany Agreement when your business group in India starts sharing resources, services, or products between related companies. This becomes essential before launching shared service centers, implementing management fee arrangements, or establishing regular product supply chains between group entities.

Get these agreements in place before the first transaction to meet Income Tax Act compliance requirements. Having clear terms documented upfront helps prevent transfer pricing disputes, protects intellectual property rights, and ensures proper allocation of profits between group companies. It's particularly important when dealing with cross-border transactions or when local tax authorities examine related-party dealings.

• Intercompany Agreement Between Parent And Subsidiary: Establishes basic operational framework between parent companies and their subsidiaries for routine transactions
• Intercompany Agreement Transfer Pricing: Focuses specifically on pricing methodologies and compliance with transfer pricing regulations
• Intercompany Credit Agreement: Governs lending arrangements and financial support between group companies
• Intercompany Settlement Agreement: Resolves disputes or establishes payment terms between group entities
• Intercompany Subordination Agreement: Prioritizes debt obligations among different group companies

• Corporate Legal Teams: Draft and review agreements to ensure compliance with Indian company law and transfer pricing regulations
• Board Members: Review and approve agreements, especially for major resource sharing or financial arrangements
• Finance Directors: Oversee pricing structures, payment terms, and financial compliance aspects
• Tax Consultants: Advise on transfer pricing implications and tax efficiency of intercompany transactions
• Company Secretaries: Ensure proper documentation and corporate governance requirements are met
• Operations Managers: Implement and monitor day-to-day compliance with agreement terms
• Group CFOs: Coordinate financial strategies across affiliated companies

• Company Details: Gather registration numbers, addresses, and authorized signatories of all involved group entities
• Transaction Scope: Define exact services, products, or resources being shared between companies
• Pricing Strategy: Document transfer pricing methodology and market rate justifications
• Service Levels: Outline performance metrics, delivery timelines, and quality standards
• Financial Terms: Specify payment schedules, currencies, and invoicing procedures
• Compliance Check: Review Income Tax Act requirements and transfer pricing regulations
• Board Approvals: Confirm necessary corporate authorizations from all participating entities
• Documentation: Maintain supporting records for tax and regulatory compliance

• Parties and Identification: Full legal names, registration details, and authorized signatories of all group entities
• Scope Definition: Detailed description of services, goods, or resources being exchanged
• Pricing Terms: Clear transfer pricing methodology aligned with Indian tax regulations
• Payment Provisions: Payment schedules, currencies, and invoicing procedures
• Service Levels: Performance standards, delivery timelines, and quality metrics
• Intellectual Property: Rights allocation and protection measures
• Confidentiality: Data protection and information sharing protocols
• Term and Termination: Duration, renewal options, and exit procedures
• Dispute Resolution: Indian jurisdiction and arbitration clauses

A key distinction exists between an Intercompany Agreement and a Business Acquisition Agreement. While both involve transactions between companies, they serve fundamentally different purposes in Indian corporate law.

• Transaction Nature: Intercompany Agreements govern ongoing operational relationships between affiliated companies, while Business Acquisition Agreements facilitate one-time purchases of entire businesses or substantial assets
• Relationship Duration: Intercompany Agreements establish continuing frameworks for regular transactions, whereas Business Acquisition Agreements typically conclude once the purchase is complete
• Tax Implications: Intercompany Agreements focus on transfer pricing compliance and routine transaction documentation, while Business Acquisition Agreements deal with capital gains and asset transfer taxation
• Regulatory Oversight: Intercompany Agreements face scrutiny from income tax authorities for related-party transactions, while Business Acquisition Agreements often require corporate law and competition commission approvals