TRANFER PRICING
TRANSFER PRICING PROVISIONS
- The provisions of Section 92 to 92F of the Act are applicable only if:
- There are two or more enterprises (defined in Sec 92F); and
- The enterprises are AEs (defined in Sec 92A); and
- The enterprises enter into a transaction (defined in Sec 92F); and
- The transaction is an International transaction (defined in Sec 92B).
- Further w.e.f. 1 April 2012, TP provisions were extended to include specified domestic transactions (SDTs) [also defined in Sec 92BA]
- Consequences of these provisions:
- Computation of income/ allowance of expenses having regard to the Arm’s length price [Section 92C]
- Maintenance of prescribed Documentation (Section 92D and Rule 10D)
- Obtaining of Accountant’s report (under Form 3CEB) (Section 92E) and filing the same within prescribed timeline
- To ensure compliance with the arm’s length principle, stiff penalties have been prescribed
- Section 92(1) –Any income arising from an international transaction shall be computed having regard to the arm’s length price. Explanation – The allowance for any expense or interest arising from an international transaction shall also be determined having regard to the arm’s length priceAny income arising from an international transaction shall be computed having regard to the arm’s length price.
- Section 92(3) – The provisions are not intended to be applied in case determination of arm’s length price reduces the income chargeable to tax or increases the loss as the case may be.
TRANSFER PRICING PENALTIES
Address - 804A, 8th Floor, Naman Midtown, Senapati Bapat Marg, Elphinstone Road, Mumbai 400013
Contact - +91-22-62295100
Email - [email protected]