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A finance analyst at a group holding company is closing the monthly consolidation for the quarter ended 30 June. Subsidiary A Ltd. reports Rs 8 crore due from subsidiary B Ltd. in the intercompany receivables schedule. Subsidiary B Ltd. reports Rs 12 crore due to subsidiary A Ltd. in the intercompany payables schedule. Both subsidiaries are on the same trial-balance date, both use the same group chart of accounts, and both are consolidated line-by-line into the parent under Ind AS 110. The Rs 4 crore mismatch cannot be eliminated at consolidation until it is reconciled, and neither controller can explain the gap from a single working paper. The question is not which side is right — both are internally consistent — but where the reconciling items sit, how they map to the six common causes, and how the reconciled balance rolls into the Ind AS 24 related-party disclosure and (where the Rs 20 crore Section 92BA threshold applies) the Form 3CEB certification for the specified-domestic transaction.
Every IUT balance mismatch between two subsidiaries decomposes into one or more of six causes. Cause one — cutoff drift — the same transaction booked on different dates across the two ledgers because of invoice-receipt lag, goods-receipt-note timing, or an approval workflow that spans the month-end. Cause two — foreign-currency translation under Ind AS 21 — where the two subsidiaries have different functional currencies or use different closing rates on the reporting date. Cause three — reversal timing — one side has posted a reversal and the counterparty has not. Cause four — retention money on the IUT invoice, withheld under a contractual clause on one side and posted at gross on the other. Cause five — capitalisation-versus-expense classification, where subsidiary A capitalises the IUT invoice into a fixed asset and subsidiary B expenses the same invoice. Cause six — a manual journal against the IUT control account that never routed through the AR/AP master and has no counterparty mirror. Each cause has a distinct diagnostic and a distinct remediation. Ind AS 110 requires full elimination of the reconciled intragroup balance at consolidation; Ind AS 24 requires disclosure of the related-party balance, the counterparty relationship, and the terms of settlement; Section 92BA(v) triggers the transfer-pricing machinery on the aggregate of specified-domestic transactions above Rs 20 crore per assessee; Section 40A(2)(b) sits behind every related-party expense and Section 92E requires Form 3CEB certification where the SDT threshold is crossed.
A monthly IUT balance confirmation workflow between the AR/AP masters of every subsidiary pair — subsidiary A's receivable ledger sent to subsidiary B's payable ledger, and vice versa, closed inside the seven working days after month-end. A six-cause reconciliation working paper for every unreconciled IUT pair — cutoff drift, forex translation, reversal timing, retention money, capex-versus-revenue classification, manual-journal-without-mirror — with the specific reconciling item, the value, and the corrective action on each side. A related-party register under Ind AS 24 that captures the counterparty relationship, the transaction value, the outstanding balance, the terms and conditions, and any guarantees given or received. A Section 92BA(v) threshold tracker for every subsidiary that aggregates the specified-domestic-transaction flows in the year against the Rs 20 crore ceiling, with reverse-calculated escalation to the tax cell when 80 per cent of the threshold is crossed. A Form 3CEB filing calendar for every subsidiary above the SDT threshold, with the arm's-length pricing methodology under Rule 10B or Rule 10AB documented and the tax audit report in Form 3CD cross-referenced.
Every intercompany balance surfaced in the monthly consolidation is reconciled to zero between the two subsidiaries or to a documented reconciling item that maps to one of the six causes. The Ind AS 110 elimination at consolidation is on the reconciled balance with no residual gap distorting the group's assets or liabilities. The Ind AS 24 related-party disclosure in the notes to the consolidated financial statements ties to the reconciled intercompany balances line-by-line, with counterparty relationship, transaction value and terms and conditions all in place. Every subsidiary that crosses the Rs 20 crore Section 92BA(v) aggregate threshold files Form 3CEB with the arm's-length pricing methodology documented, and the Section 40A(2)(b) fair-market-value defence for every related-party payment sits inside the transfer-pricing documentation. The statutory audit at year-end lands with no open intercompany reconciliation query, and the group's intercompany control accounts close cleanly across every subsidiary pair.
A Ltd. shows Rs 8 crore due from B Ltd. in the intercompany receivables schedule as at 30 June. B Ltd. shows Rs 12 crore due to A Ltd. in the intercompany payables schedule as at the same date. Both subsidiaries roll into the same parent, both books are closed on the same trial-balance date, and neither controller can explain the Rs 4 crore gap from a single working paper.
You are the group finance analyst tasked with closing the monthly consolidation. The Ind AS 110 elimination line cannot be booked until the two sides agree. The Ind AS 24 disclosure in the notes to the consolidated financial statements will surface the unreconciled balance if the gap is still open at year-end. And if either subsidiary crosses the Rs 20 crore Section 92BA(v) aggregate threshold in the year, the intercompany flow lands inside a Form 3CEB filing with an arm’s-length pricing methodology to defend.
The quick answer
The reconciliation is a six-cause checklist walked between the two subsidiaries’ controllers before the group finance team eliminates at consolidation. Cause one is cutoff drift (same transaction, different booking date). Cause two is foreign-currency translation under Ind AS 21 (different functional currencies or different closing rates). Cause three is reversal timing (one side reversed, the other has not). Cause four is retention money withheld on one side and gross on the other. Cause five is capitalisation-versus-expense classification (one capitalises to a fixed asset, the other expenses to cost of goods sold). Cause six is a manual journal against the IUT control account with no counterparty mirror. Every unreconciled item is one of the six, and the reconciled balance is what gets eliminated under Ind AS 110.
Cause one — cutoff drift
The most common cause, and the easiest to spot. Subsidiary A raises IUT invoices on 29 and 30 June against subsidiary B for Rs 3 crore. A books the entries in its accounts receivable ledger on 30 June. The invoices are couriered through the inward register at subsidiary B’s premises on 1 and 2 July, so B does not book the mirror payable until the July close. A closes June at Rs 8 crore receivable; B closes June at Rs 5 crore payable on this leg. The Rs 3 crore gap is a pure cutoff item — the underlying transaction is agreed between the two sides, only the booking date drifted across the month-end.
The remediation is a cutoff working paper at every month-end that lists every IUT invoice A raised in the last three working days of the month and confirms whether B has booked the mirror. Where B has not, the group finance team accrues the counterparty side at consolidation and eliminates on the accrued figure — Ind AS 110 does not require the two subsidiaries to have booked on the same date, only that the group elimination is on a reconciled figure.
Cause two — foreign-currency translation under Ind AS 21
Where subsidiary A’s functional currency is INR and subsidiary B’s functional currency is USD (a subsidiary registered in a foreign jurisdiction), the IUT balance on each side is translated to the reporting currency at each subsidiary’s closing rate under Ind AS 21. If A uses the closing INR/USD rate on 30 June and B uses the same closing INR/USD rate but from a different reference source (say A uses the RBI reference rate and B uses the FEDAI rate), the translated balance diverges even though the underlying foreign-currency exposure ties.
The remediation is a foreign-currency reconciliation working paper that captures the underlying foreign-currency amount on each side, the exchange rate applied, and the residual translation gap. Ind AS 21 requires the translation gain or loss to be recognised in profit or loss in the period it arises — the reconciled foreign-currency balance eliminates at consolidation on the group’s presentation currency after the translation adjustment is booked.
Cause three — reversal timing
Subsidiary A raises an IUT invoice on 15 June for Rs 50 lakh; subsidiary B rejects the invoice on 25 June and A books the reversal on 28 June. If B has not yet posted the mirror reversal — because the rejection was communicated by email and B is still routing the credit-note request through its approval workflow — A’s balance shows the invoice reversed while B’s balance still carries it. The mismatch is Rs 50 lakh, and the direction depends on which side has moved first.
The remediation is an IUT reversal register that tracks every credit note raised in the current period and confirms whether the counterparty has posted the mirror. The two sides should net to zero on the reversal by the next month-end; a reversal that is open in one side for more than sixty days is a specific escalation to the counterparty controller.
Cause four — retention money on the IUT
Where the IUT invoice is a services or works-contract engagement between the two subsidiaries, the counterparty may withhold a contractual retention — say 5 per cent of the invoice value against warranty performance for twelve months. Subsidiary A books the IUT invoice at gross Rs 1 crore in receivables. Subsidiary B books the mirror at Rs 95 lakh in payables (recognising the retention withheld) plus a separate Rs 5 lakh retention payable that will release after the warranty period. The gross-versus-net treatment on the IUT control gives a Rs 5 lakh mismatch per invoice.
The remediation is to document the retention treatment in the intercompany master data agreement between the two subsidiaries, ensure both sides classify the retention identically (either both gross with a separate retention payable/receivable, or both net), and reconcile the retention pool in the notes to the accounts. Ind AS 24 requires disclosure of the terms and conditions of related-party balances — the retention arrangement is one of the specific terms.
Cause five — capitalisation versus revenue classification
Subsidiary A supplies a piece of plant machinery to subsidiary B for Rs 2 crore under an IUT invoice. Subsidiary B capitalises the receipt into fixed assets as an addition to plant, and posts the counterparty leg to IUT payables. Subsidiary A treats the same transaction as a revenue sale from a manufacturing segment, and posts the counterparty leg to IUT receivables. Both entries are internally consistent, both post to the IUT control at Rs 2 crore, and the IUT balance mirrors correctly — but at consolidation, the capex-versus-revenue asymmetry surfaces on the elimination of income and expenses under Ind AS 110.
The remediation is a capex-versus-revenue tag on every IUT invoice at the group-master-data level, with a group finance team review of every IUT flow above a materiality threshold to confirm the classification is consistent. The why is this expense capex or revenue in my books walkthrough covers the specific tests for the capex-versus-revenue decision inside the Indian accounting framework.
Cause six — a manual journal against the IUT control with no mirror
A finance user in subsidiary A posts a manual journal entry against the IUT control account for an intercompany fund transfer of Rs 25 lakh, tagging it to subsidiary B — but the entry never routed through the AR ledger, no invoice was raised, and subsidiary B has no visibility of the entry at all. The IUT balance on A’s side jumps by Rs 25 lakh with no counterparty mirror in B.
The remediation is a hard control at the ERP level — every entry against the IUT control account must route through the AR or AP sub-ledger with an invoice or credit-note reference, and manual journals against IUT control accounts require dual authorisation from both subsidiaries’ controllers. The group finance team runs a monthly IUT-control-versus-sub-ledger tie-out to surface any orphan manual journals.
The one to escalate first — the largest single-invoice gap
Bucket the entire unreconciled IUT balance by cause and by absolute value. The single-largest unreconciled item is the escalation-first candidate — a Rs 3 crore cutoff drift may look benign but can hide a Section 40A(2)(b) fair-market-value question if the underlying invoice is a related-party services engagement at a materially non-arm’s-length rate. Where the IUT flow between two subsidiaries is above the Rs 20 crore Section 92BA(v) aggregate ceiling for the year, every unreconciled item above Rs 25 lakh is a specific documentation item for the Form 3CEB filing. The related-party payment disallowance walkthrough covers the Section 40A(2)(b) exposure and the tax-audit disclosure on related-party expenses, and the SDT under Section 92BA reference covers the specific SDT categories that trigger the transfer-pricing machinery.
For an intercompany inter-unit stock transfer of a physical good (say cement clinker moving between two units of a group cement company under a stock-transfer note), the reconciliation also has to account for the IGST implication of the deemed inter-state supply under Section 25(4) of the CGST Act — the cement plant clinker inter-unit stock transfer GST and IGST reconciliation walkthrough is the deeper treatment of the goods-movement leg alongside the ledger reconciliation.
Where the six-cause discipline lands at consolidation
Once the six-cause working paper is closed, the reconciled IUT balance is what the group finance team eliminates under Ind AS 110. The Ind AS 24 disclosure in the notes to the consolidated financial statements captures the counterparty relationship, the transaction value for the year, the outstanding balance at the reporting date, the terms and conditions (including any retention arrangement), and details of any guarantees given or received. The consolidated trial balance nets the intercompany line-items to zero, and the statutory auditor’s related-party review at year-end lands without an open reconciliation query.
For every subsidiary that crosses the Rs 20 crore Section 92BA(v) SDT aggregate threshold in the year, the reconciled intercompany flow feeds directly into the Form 3CEB filing under Section 92E — every SDT transaction reported in Form 3CEB must reconcile to the ledger flow, and the arm’s-length pricing methodology (comparable uncontrolled price, resale price, cost plus, transactional net margin, profit split or the other method under Rule 10AB) has to be defensible against the intercompany working paper. The intercompany reconciliation in India group-finance overview is the wider treatment of the GST, TDS and transfer-pricing dimensions that overlay the ledger reconciliation described here.
When the manual IUT reconciliation outgrows itself
A small Indian group with two or three subsidiaries and a handful of monthly IUT flows can hold the reconciliation in a shared spreadsheet — subsidiary A’s receivable balance next to subsidiary B’s payable balance, a six-cause column, and a monthly close-out sign-off between the two controllers. The month-end call between the finance teams walks the reconciling items in twenty minutes, and the Ind AS 110 elimination is booked on the reconciled figure without residual noise.
A mid-market group with ten-plus subsidiaries, mixed functional currencies, a monthly SDT flow above the Rs 20 crore threshold on more than one leg, capex-versus-revenue asymmetry across manufacturing and services entities, and a Form 3CEB filing calendar that has to reconcile to the ledger flow, is running a rolling matrix of pairwise reconciliations that a spreadsheet cannot hold reliably. The exposure is not a single-invoice miss but the compounding of many unreconciled items into an Ind AS 110 elimination that carries a residual gap the auditor will surface at year-end, and a Form 3CEB filing that does not tie to the ledger.
At that scale, moving the pairwise IUT balance confirmation, the six-cause reconciliation working paper, and the Section 92BA aggregate-threshold tracker onto continuously refreshed detection — where Terra Insight’s reconciliation software for India treats the intercompany control account as a first-class monthly output rather than a spreadsheet the finance teams refresh on demand — is what keeps the elimination discipline inside the operational close and closes the tax-audit exposure on the SDT tail. Below that scale, the shared-spreadsheet-plus-monthly-call model is the right tool and the discipline of walking the six causes by hand is what builds the reconciler’s judgement for when scale demands the shift.
Go deeper
- Cement plant clinker inter-unit stock transfer — the GST and IGST reconciliation walkthrough
- Why is my related-party payment being disallowed — the Section 40A(2)(b) exposure
- What is a specified domestic transaction (SDT) under Section 92BA
- Intercompany reconciliation in India — the group-finance overview
- Reconciliation software for India
Frequently Asked Questions
What actually is an Inter Unit Transfer (IUT), and why do the two sides diverge?
An Inter Unit Transfer is any movement of goods, services, funds or an accounting entry between two entities of the same group — typically routed through an intercompany control account in each subsidiary’s ledger. Subsidiary A raises an invoice or a debit note on subsidiary B; subsidiary A books the entry in its Accounts Receivable master (or an IUT-A/R sub-ledger); subsidiary B books the mirror entry in its Accounts Payable master (or an IUT-A/P sub-ledger). At every month-end, the two sides should equal — subsidiary A’s balance due from B should equal subsidiary B’s balance due to A. In practice the two diverge because the entries are booked on different dates, on different exchange rates, on different classifications (capex versus revenue), with retention money withheld on one side, or with one leg reversed and the counterparty leg not yet reversed. The IUT balance confirmation is the monthly cycle where the two controllers agree on the reconciling items and land on a single reconciled balance that the group finance team can eliminate in the Ind AS 110 consolidation.
When does the Section 92BA specified-domestic-transaction (SDT) trigger apply to intercompany transactions?
Section 92BA(v) covers any prescribed transaction between related persons where the aggregate of specified-domestic transactions entered into by the assessee in the previous year exceeds Rs 20 crore. The Rs 20 crore threshold is measured per assessee — subsidiary A tests its own aggregate of SDT flows against the threshold; subsidiary B tests its own. Once either side crosses Rs 20 crore, the transfer-pricing machinery under Sections 92, 92C, 92D and 92E is triggered — contemporaneous transfer-pricing documentation has to be maintained under Rule 10D, Form 3CEB must be filed under Section 92E, and the arm’s-length pricing methodology (comparable uncontrolled price, resale price, cost plus, transactional net margin, profit split or the other method under Rule 10AB) has to be applied to the SDT flow. A group with intercompany flows above Rs 20 crore per subsidiary cannot avoid the Form 3CEB certification. See the sibling walkthrough on the SDT trigger for the specific transaction categories inside Section 92BA.
Why does the Rs 12 crore case in the opening paragraph tie to Rs 3 crore of in-transit invoices and Rs 1 crore of payment timing?
Subsidiary A’s Accounts Receivable ledger shows Rs 8 crore due from subsidiary B — the entries A has raised as at 30 June that have not been settled. Subsidiary B’s Accounts Payable ledger shows Rs 12 crore due to subsidiary A — the entries B has recorded as at 30 June, including Rs 3 crore of invoices A raised on 29-30 June that arrived in B’s inward register on 1-2 July, plus Rs 1 crore of a payment B initiated on 28 June that A received on 3 July. The Rs 3 crore is a classic cutoff drift — same underlying transaction, different booking date across the two subsidiaries. The Rs 1 crore is a payment-in-transit — B has debited the payable and credited bank, A has not yet credited the receivable because the electronic settlement is still in flight on the reporting date. Once the reconciling items are agreed between the two controllers, the reconciled IUT balance is Rs 8 crore (the A-side view; B’s Rs 12 crore reduces by the Rs 3 crore cutoff invoices that A has already raised but B has now recognised, and the Rs 1 crore payment that A has not yet recognised is the residual timing). The elimination at consolidation lines up on the reconciled figure.
What are the six common causes of an IUT balance mismatch between two subsidiaries?
Cause one is cutoff drift — the same transaction booked on different dates in the two ledgers because of invoice-receipt lag, GRN timing, or an approval workflow that spans the month-end. Cause two is foreign-currency translation under Ind AS 21 — where the two subsidiaries have different functional currencies or use different closing rates on the reporting date, the translated INR balance on each side diverges even though the underlying foreign-currency exposure ties. Cause three is reversal timing — one side has posted a reversal entry for a returned or cancelled transaction and the counterparty has not, so the mirror is off by the reversal amount. Cause four is retention money — a portion of the IUT invoice is withheld under a contractual retention clause on one side but posted at gross on the other, creating a per-invoice difference equal to the retention percentage. Cause five is capitalisation-versus-expense classification — subsidiary A capitalises the IUT invoice into a fixed asset (and grosses the balance for GST input tax credit); subsidiary B expenses the same invoice into cost of goods sold; the balance mismatch shows on the trial balance line even though the IUT control account nets. Cause six is the elimination sub-ledger itself — one subsidiary has raised a manual journal entry against the IUT control that never routed through the AR/AP master, and the counterparty has no mirror at all.
How does the intercompany reconciliation link to Ind AS 110 elimination at consolidation?
Ind AS 110 requires the parent to eliminate in full intragroup assets, liabilities, income, expenses, equity and cash flows relating to transactions between entities of the group when preparing consolidated financial statements. The elimination is a single line at group level that removes the balance receivable in subsidiary A and the matching balance payable in subsidiary B — but the elimination can only be booked if the two sides equal. Where the two sides do not equal (the Rs 12 crore case), the group finance team cannot simply pick one side and eliminate it; the residual gap distorts the consolidated assets or liabilities. The standard technique is to eliminate the reconciled balance, provision the reconciling items separately (in-transit as a group-level accrual, cutoff drift as a group-level payable/receivable pending the counterparty’s next-period booking), and disclose the outstanding intragroup balance under Ind AS 24 with the counterparty relationship and the terms of settlement. A group that eliminates without reconciling first ends up with a mismatched Ind AS 110 elimination that the statutory auditor will surface as an audit query at year-end.
Content authored by practitioners with experience at Amazon India, Intuit QuickBooks, and the Tata Group. Meet the team →
- ▸ Ind AS 24, Related Party Disclosures — An entity's financial statements shall contain the disclosures necessary to draw attention to the possibility that its financial position and profit or loss may have been affected by the existence of related parties and by transactions and outstanding balances, including commitments, with such parties. The name of the entity's parent and, if different, the ultimate controlling party shall be disclosed. If the reporting entity has had related-party transactions during the periods covered by the financial statements, it shall disclose the nature of the related-party relationship as well as information about those transactions and outstanding balances, including commitments, necessary for users of the financial statements to understand the potential effect of the relationship on the financial statements. At a minimum, disclosures shall include the amount of the transactions, the amount of outstanding balances (including commitments), and their terms and conditions, whether they are secured, and the nature of the consideration to be provided in settlement, and details of any guarantees given or received.
- ▸ Ind AS 110, Consolidated Financial Statements — A parent shall present consolidated financial statements in which it consolidates its investments in subsidiaries in accordance with this Indian Accounting Standard. Consolidation of an investee shall begin from the date the investor obtains control of the investee and cease when the investor loses control of the investee. Consolidation procedures require that the parent combine like items of assets, liabilities, equity, income, expenses and cash flows of the parent with those of its subsidiaries, offset (eliminate) the carrying amount of the parent's investment in each subsidiary and the parent's portion of equity of each subsidiary, and eliminate in full intragroup assets, liabilities, equity, income, expenses and cash flows relating to transactions between entities of the group. Intragroup losses may indicate an impairment that requires recognition in the consolidated financial statements. A balance receivable in one subsidiary that does not equal the balance payable in the counterparty subsidiary cannot be eliminated at consolidation without a matching adjustment — the unreconciled residue distorts the group's assets and liabilities.
- ▸ Section 92BA, Income-tax Act 1961 — For the purposes of Sections 92, 92C, 92D and 92E, specified domestic transaction in case of an assessee means any of the following transactions, not being an international transaction, namely any transaction referred to in Section 80A; any transfer of goods or services referred to in sub-section (8) of Section 80-IA; any business transacted between the assessee and other person as referred to in sub-section (10) of Section 80-IA; any transaction, referred to in any other Section under Chapter VI-A or Section 10AA, to which provisions of sub-section (8) or sub-section (10) of Section 80-IA are applicable; and any other transaction as may be prescribed, where the aggregate of such transactions entered into by the assessee in the previous year exceeds a sum of twenty crore rupees. The Rs 20 crore aggregate threshold is a per-assessee test on the total specified-domestic-transaction value in the year. Once the threshold is crossed, the transfer-pricing machinery under Sections 92, 92C, 92D and 92E is triggered, and the assessee must maintain contemporaneous transfer-pricing documentation and file Form 3CEB certified by an accountant under Section 92E.
- ▸ Section 40A(2)(b), Income-tax Act 1961 — Where the assessee incurs any expenditure in respect of which payment has been or is to be made to any person referred to in clause (b) of this sub-section, and the Assessing Officer is of opinion that such expenditure is excessive or unreasonable having regard to the fair market value of the goods, services or facilities for which the payment is made, or the legitimate needs of the business or profession of the assessee, or the benefit derived by or accruing to him therefrom, so much of the expenditure as is so considered by him to be excessive or unreasonable shall not be allowed as a deduction. Clause (b) covers any relative of the assessee; any director, partner or member of a company or firm; any relative of such director, partner or member; any other company having a substantial interest in the business or profession of the assessee; any director of such other company or any relative of such director; and any person in whom the assessee has a substantial interest. Section 2(41) defines relative, and Explanation to Section 40A(2)(b) defines substantial interest as beneficial ownership of at least 20 per cent equity or 20 per cent share of profit. A payment between two subsidiaries of the same group falls squarely inside the Section 40A(2)(b) net.
- ▸ Ind AS 21, The Effects of Changes in Foreign Exchange Rates — A foreign currency transaction shall be recorded, on initial recognition in the functional currency, by applying to the foreign currency amount the spot exchange rate between the functional currency and the foreign currency at the date of the transaction. At the end of each reporting period, foreign currency monetary items shall be translated using the closing rate. Exchange differences arising on the settlement of monetary items or on translating monetary items at rates different from those at which they were translated on initial recognition during the period or in previous financial statements shall be recognised in profit or loss in the period in which they arise. Where subsidiary A and subsidiary B each translate the same underlying IUT balance using their own functional-currency closing rate on the same reporting date, the balance-payable and balance-receivable numbers can diverge purely on the exchange-rate leg — the difference has to be picked up in the reconciliation before elimination at consolidation.
- ▸ Section 92E, Income-tax Act 1961 (Form 3CEB) — Every person who has entered into an international transaction or specified domestic transaction in a previous year shall obtain a report from an accountant and furnish such report on or before the specified date in the prescribed form (Form 3CEB) duly signed and verified in the prescribed manner by such accountant and setting forth such particulars as may be prescribed. Form 3CEB reports the nature of the international or specified-domestic transaction, the associated enterprise counterparty, the transaction value, and the method used to determine the arm's-length price. For a specified-domestic transaction between two subsidiaries of the same group where the Rs 20 crore Section 92BA threshold is crossed, Form 3CEB is a hard filing requirement in addition to the tax audit report in Form 3CD, and the arm's-length determination in Form 3CEB must reconcile to the transaction values in the intercompany reconciliation working paper.