Guidance on Transfer Pricing
998212
*The price is exclusive of any amount payable to Government/Regulatory Authorities and GST.
Our expert will provide you with guidance on various transfer pricing provisions including guidance on any specific transaction
Price
999
Services covered :
- Explaining the Provision
- Providing a solution to your queries
FAQ ()
Question :
What is the meaning of transfer pricing?
Answer :
Transfer pricing can be defined as the value of goods or services transferred between related parties. In other words, transfer pricing is the price that is paid for goods or services transferred from one unit of an organization to its other units situated in different countries (with exceptions)
Question :
What is the need of transfer pricing?
Answer :
Related Parties may transact on different prices which are not arms length price. Because of this tax planning's are possible and government may have tax loss. Thus transfer pricing concept arises and the transaction will be taken on arms length price.
Question :
What is arm length price?
Answer :
He price at which a willing buyer and a willing unrelated seller would freely agree to transact or a trade between related parties that is conducted as if they were unrelated, so that there is no conflict of interest in the transaction.
Question :
What are different methods to calculate the arm length price?
Answer :
1. Comparable Uncontrolled Price Method;
2. Resale Price Method;
3. Cost Plus Method;
4. Profit Split Method;
5. Transaction Net Margin Method
Question :
Is there any form to be submitted for the transfer pricing transaction initiated?
Answer :
Any person who has involved in an international transaction in the previous year shall submit the report in Form 3CEB through a Chartered Accountant, duly verified by him, on or before the date prescribed by the authority, furnishing all the required details.
Question :
Does transfer pricing apply to transactions between head office and branch?
Answer :
No. head office and branch are same and transfer pricing provisions will not apply in internal transfer. But if branch declare it as permanent establishment then transfer pricing provisions may applicable.
Question :
What is an Associated enterprise?
Answer :
When one enterprise
1) can participate in the second enterprise; or
2) a third enterprise participates in both the first and second enterprise; directly, or indirectly, or through one or more intermediaries, and where such participation is through the capital, management or control, then such first and second enterprises are known as ‘Associated Enterprises’.
Question :
What is an International transaction?
Answer :
“International transaction” means a transaction between two or more associated enterprises, either or both of whom are non-residents, in the nature of purchase, sale or lease of tangible or intangible property, or provision of services, or lending or borrowing money, or any other transaction having a bearing on the profits, income, losses or assets of such enterprises, and shall include a mutual agreement or arrangement between two or more associated enterprises for the allocation or apportionment of, or any contribution to, any cost or expense incurred or to be incurred in connection with a benefit, service or facility provided or to be provided to any one or more of such enterprises.
Question :
Applicability of transfer pricing in domestic transactions?
Answer :
Applicability of transfer pricing provisions was earlier limited to International Transactions only. With effect from 01.04.2013, the scope of Transfer Pricing provisions is extended to ‘Specified Domestic Transactions’ and is accordingly applicable from A.Y. 2013-14.
With the applicability of Transfer Pricing provisions on Specified Domestic Transactions, now it is the obligation on the taxpayer to report/document & substantiate the Arm’s Length nature of such transaction.
Question :
What kind of domestic transactions are entered in transfer pricing?
Answer :
The following transactions where, the aggregate value of domestic transaction entered into by related parties exceeds Rs.20 crore, then transfer pricing is applicable.
1. Any transaction referred to in sec 80IA(8) and sec 80IA(10)
2. Any transaction referred in Sec 80A
3. Any transaction referred in any other section under VIA or Section 10AA to which provision of 80-IA (8)/(10) are applicable
4. Any business transacted between the persons referred to in sec 115 BAB
5. Any other transaction as may be prescribed.
