Transfer Pricing - InCorp Advisory

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Overview

Transfer Pricing is one of the critical tax issues for growth-oriented businesses having international operations wherein substantial senior management’s time and attention is necessary. Irrespective of their size, organizations need an effective and dependable Transfer Pricing policy, which takes into consideration the organization’s overall business strategy and operating structure.

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InCorp’s Transfer Pricing team with its rich experience and demonstrated capabilities offers comprehensive solutions in areas such as Transfer Pricing Documentation, Transfer Pricing assessments, and other value-added services such as Benchmarking services, Drafting of Inter-company agreements, etc.

Service Areas Within Transfer Pricing Services

Creating Transfer Pricing Documentation

The Transfer Pricing legislation requires that income from International Transactions between Associated Enterprises is computed after considering the arm’s length price. The term “Arm’s-length Price” refers to the price that would be charged for a similar International Transaction between unrelated third parties. The Transfer Pricing Documentation created by RSM Astute covers the various mandatory requirements under the law and includes:

Background of the Company and its Associated Enterprises
Functional Analysis to document the Functions, Risks and Assets deployed
Industry Overview
Comparability/Benchmarking analysis to prove the Arm’s Length nature of International Transactions entered into between Associated Enterprises

Representing Before Transfer Pricing Authorities

These services include representation before the designated Transfer Pricing Officers/Assessing Officers for Transfer Pricing related matters. The scope of services provided also covers representation before higher authorities like Commissioner of Income Tax etc.

Other Value Added Services Relating To

Planning Opportunities to achieve lower taxation for the group
Assisting clients in Benchmarking vis a vis other players in the same industry
Drafting of Inter-Company agreements, review of documentation etc

Frequently Asked Questions

What is Transfer Price?

Transfer Price is the price which is charged between two or more entities of a Multinational Group (known as Associated Enterprises) operating in different countries for common business transactions which are in the nature of sale of goods, assets, provision of services etc.

What are Transfer Pricing regulations in India?

The Indian Income Tax Act contains specific set of provisions relating to Transfer Pricing which were introduced in 2001. These provisions mainly deal with identification of associate enterprises (international and domestic), applicability of the provisions to specified set of transactions and the principles for computation of arm’s length price for such transactions. Associated Enterprises are identified under different scenarios mainly on the basis of equity participation, management, control, debt, use of intangibles, supply of raw materials etc. Arms Length price is determined on the basis of methods prescribed in the rules.

What are the statutory compliances prescribed under Transfer Pricing regulations?

» Obtaining and furnishing of Accountant’s Report (Form No. 3CEB) on or before 31st October 2020 (for FY 2019-20 and onwards).
» Maintain contemporaneous documentation in respect of transactions entered into with associated enterprises (if the aggregate transaction value exceeds INR 10 Million) giving specific details as per the prescribed rules.
» Supplementary filings in the nature of Country-by-Country Report and Master File if the prescribed conditions are satisfied.

What is the penalty for non-compliance?

Non-compliance with the prescribed provisions could attract penal provisions for eg. Non-filing of accountants report, non-maintenance of documentation, under-reporting / misreporting of income etc. The penalty could be levied either on a per-day basis or a fixed amount or even on the basis of transaction value; depending upon the default.

Other Services

Overview

Service Areas Within Transfer Pricing Services

Frequently Asked Questions

Contact Our Expert Team

Kartik Shah

Head

Foreign Exchange Management Act (FEMA) and International Tax

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