SVB Compliance in India: Why Importers Need a Customs and Transfer Pricing Readiness Review

Importers must align customs valuation, transfer pricing, and intercompany documentation to strengthen India Special Valuation Branch (SVB) compliance and mitigate regulatory exposure.

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For multinational companies importing goods into India from parent companies, affiliates, subsidiaries, or other group entities, Special Valuation Branch (SVB) compliance is no longer just a customs filing exercise. It is now a broader risk area involving customs valuation, HSN classification, transfer pricing, intercompany agreements, and post-clearance audit readiness.

India’s SVB framework is governed by Central Board of Indirect Taxes and Customs (CBIC) procedures for reviewing related-party import transactions, including cases involving royalties, license fees, technical fees, and other payments that may affect the customs value of imported goods.

The practical compliance environment has become more demanding. Faster cargo clearance, risk-based customs controls, post-clearance audits, and more detailed transfer pricing reporting mean that importers must ensure their customs, tax, and intercompany documentation are aligned before questions arise.

For foreign-invested companies, the more important question is: Can the company defend its import pricing, HSN classification, intercompany agreements, and transfer pricing position as one consistent story?

Why SVB risk has become more commercially significant

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SVB reviews are triggered when an Indian importer purchases goods from a related foreign supplier and customs authorities need to assess whether the relationship has influenced the declared import value.

This matters because customs and transfer pricing authorities review the same related-party transaction from different perspectives.

Customs authorities are concerned that import values may be understated, reducing customs duty. Income tax authorities, through transfer pricing rules, examine whether import prices or related-party payments reduce taxable profits in India.

This creates a practical challenge for multinational importers.

A company may have a completed SVB process but outdated intercompany agreements. It may have a strong transfer pricing study but weak customs valuation support. Or it may have correct pricing but incorrect HSN classification. Each gap can create avoidable exposure.

Form 48 raises the need for stronger alignment

India’s new income-tax reporting framework has made transfer pricing documentation more structured. The Income Tax (IT) Department has introduced Form 48, replacing the erstwhile Form 3CEB, as the accountant’s report for international transactions and/or specified domestic transactions under the Income-tax Act, 2025, and Income Tax Rules, 2026.

For importers, this increases the importance of consistency across customs and tax filings. Form 48 may capture transaction-wise details on associated enterprises, pricing methods, arm’s length price determination, margins, comparables, and adjustments.

While transfer pricing documentation does not replace customs valuation evidence, inconsistencies between Form 48, SVB filings, customs declarations, intercompany agreements, and financial statements can increase the risk of regulatory questions.

Importers should therefore review SVB positions before finalizing annual transfer pricing documentation, implementing year-end pricing adjustments, or introducing new intercompany charges.

Common triggers for SVB review

Companies should reassess their SVB position when there is a material change in related-party import arrangements.

These changes may affect the original basis on which the SVB position was reviewed. Importers should not wait for a customs query to identify these issues.

A proactive SVB readiness review can help determine whether additional disclosures, revised documentation, or valuation support may be required.

ALSO READ: Import-Export Procedures in India: 2026 Edition

Why HSN classification should come first

HSN classification is often treated as a separate compliance issue, but it is central to SVB readiness. Incorrect classification can affect duty rates, exemption eligibility, documentation, valuation review, and the level of customs scrutiny.

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For importers with large product portfolios, especially in sectors such as medical devices, electronics, machinery, automotive components, chemicals, and industrial equipment, HSN classification should be reviewed before preparing the SVB application. This helps ensure that the product description, technical specifications, import documents, and valuation methodology are aligned from the start.

Intercompany agreements need customs review

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Intercompany agreements are often drafted for legal, tax, or group policy purposes. However, customs authorities may examine whether payments under these agreements should be added to the assessable value of imported goods.

Clauses relating to royalties and license fees and trademark or brand use should be reviewed carefully.

If these payments are linked to imported goods, customs authorities may examine whether they should form part of the customs value. This is why SVB compliance should involve customs, tax, legal, finance, and supply chain teams – not only the customs broker.

Practical SVB advisory roadmap for importers

Companies preparing an SVB application or reviewing an existing related-party import structure can benefit from a phased approach.

Indicative timelines depend on the size of the product portfolio, document readiness, transaction complexity, and authority processing. HSN classification and SVB application preparation may each require several working weeks once complete documents are available. The filing and closure phase is authority-dependent and may take several months.

SVB readiness checklist for importers

Before filing or updating an SVB position, companies should ask:

How Dezan Shira & Associates can assist

SVB compliance should be managed as a coordinated customs and transfer pricing exercise. Dezan Shira & Associates assists foreign companies in India with end-to-end SVB readiness, including:

• HSN classification review;
• SVB applicability assessment;
• Transaction structure and customs valuation review;
• Preparation of Annexure A and SVB questionnaire responses;
• Review of intercompany agreements;
• Royalty, license fee, and service fee analysis;
• Transfer pricing study and benchmarking support;
• Reconciliation of SVB filings with Form 48 disclosures;
• SVB filing and authority liaison;
• Query response and additional submission support; and
• Post-clearance audit readiness.

For multinational importers, the commercial objective is clear: avoid customs disruption, reduce valuation exposure, and ensure that import pricing, transfer pricing, and intercompany documentation remain defensible.

Companies importing from related parties should consider an SVB readiness review before introducing new intercompany agreements, making year-end transfer pricing adjustments, filing Form 48, expanding product lines, or importing from new group suppliers.

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