What is Transfer Pricing?
Transfer pricing is the process of setting, reviewing, and adjusting prices for goods, services, or property (including intangible assets) exchanged between related companies.
Is it Mandatory?
Yes, according to Sections 92 to 92F of the Income-tax Act, 1961. These rules ensure that transactions between related companies follow the arm’s length principle, meaning the prices should be the same as those charged between independent businesses.
To calculate the correct price (called the arm’s length price or ALP), businesses must use one of the following methods:
Comparable Uncontrolled Price (CUP) Method
Resale Price Method (RPM)
Cost Plus Method (CPLM)
Profit Split Method (PSM)
Transactional Net Margin Method (TNMM)
What We Provide?
We offer professional services to help businesses manage their transfer pricing, ensuring compliance with the law. Our services include:
Planning, reviewing, and assessing your transfer pricing system
Making sure your business complies with transfer pricing regulations
Representing you before tax authorities
Offering flexible tax planning with the right transfer pricing methods
Advising on potential risks related to tax laws and company policies
Deliverables
Documentation:
As required by Rule 10D of the Income-tax Act, we prepare the necessary documentation that includes:
Functional analysis
Asset analysis
Risk analysis
Certification:
Companies that need to file transfer pricing reports must submit FORM 3CEB, signed by a Chartered Accountant, to the tax department before the income tax filing deadline.
Transfer Pricing Assessment under Section 92CA
During a transfer pricing assessment, the transfer pricing officer checks if the prices in international transactions are set correctly (at arm’s length) and looks for any discrepancies.
Advance Ruling under Section 245O
An advance ruling is a decision made by tax authorities regarding:
A transaction involving a non-resident, or
A transaction between a resident and a non-resident, or
A transaction involving a resident applicant.
The ruling can also address issues like:
The tax liability of a non-resident or resident due to the transaction
Questions of law or facts related to the transaction
Determining if a proposed arrangement is an impermissible avoidance arrangement
Services
Representation before income tax authorities for assessments, investigations, and related matters
Representation before appellate authorities
Representation before the Dispute Resolution Panel
Assistance with preparing and filing applications for advance rulings
Representation before the Authority for Advance Ruling
Tax compliance for international transactions and multinational companies (MNCs) has become more complex due to BEPS (Base Erosion and Profit Shifting) guidelines.
Services
Filing Form 3CEB
Filing the master file and Country-by-Country (CbC) Report
Filing Form 15CA and Form 15CB
Filing flipside returns
International transactions and arrangements are more likely to face legal issues due to differences between Double Taxation Avoidance Agreements (DTAA) and local tax laws. To avoid future disputes and extra tax costs, it’s important to get tax advice before entering any transaction or agreement.
Services
Providing advice on DTAA and domestic tax laws.