The Intercompany Cost Plus Agreement is essential for multinational companies operating in India that engage in intra-group service arrangements. This document is particularly crucial when one entity provides services to another related entity within the same corporate group, requiring a structured approach to pricing and cost allocation. The agreement ensures compliance with Indian transfer pricing regulations, which mandate that related-party transactions be conducted at arm's length. It typically includes detailed cost calculations, markup methodologies, and service specifications, while addressing requirements under key Indian legislation such as the Income Tax Act, Companies Act, and GST laws. This type of agreement is commonly used in shared service arrangements, management services, technical support, and other intra-group service provisions where systematic cost allocation and pricing documentation are necessary for regulatory compliance.

1. Parties: Identification of the service provider and service recipient companies, including registration details and addresses

2. Background: Context of the agreement, relationship between parties, and brief description of the business purpose

3. Definitions: Definitions of key terms used in the agreement, including 'Costs', 'Markup', 'Services', and other relevant terms

4. Scope of Services: Detailed description of services to be provided by the service provider to the service recipient

5. Cost Determination: Methodology for calculating the cost base, including direct and indirect costs, allocation methods

6. Markup Structure: Specification of the agreed markup percentage and its application

7. Billing and Payment Terms: Invoicing frequency, payment terms, currency, and payment methods

8. Service Levels: Performance standards, quality requirements, and delivery specifications

9. Documentation and Records: Requirements for maintaining supporting documentation for costs and services

10. Term and Termination: Duration of the agreement and conditions for termination

11. Compliance and Governance: Transfer pricing compliance, regulatory requirements, and governance structure

12. Confidentiality: Protection of confidential information exchanged during service provision

13. Dispute Resolution: Process for resolving disputes between parties

14. General Provisions: Standard clauses including notices, amendments, governing law, etc.