Latest Expert Exchange Queries
sitemapHome | Registration | Job Portal for CA's | Expert Exchange | Currency Converter | Post Matrimonial Ads | Post Property Ads
 
 
News shortcuts: From the Courts | News Headlines | VAT (Value Added Tax) | Service Tax | Sales Tax | Placements & Empanelment | Various Acts & Rules | Latest Circulars | New Forms | Forex | Auditing | Direct Tax | Customs and Excise | ICAI | Corporate Law | Markets | Students | General | Indirect Tax | Mergers and Acquisitions | Continuing Prof. Edu. | Budget Extravaganza | Transfer Pricing
 
 
 
 
Popular Search: TDS :: form 3cd :: Central Excise rule to resale the machines to a new company :: VAT RATES :: articles on VAT and GST in India :: ACCOUNTING STANDARDS :: due date for vat payment :: cpt :: ICAI offer Get Windows 7,Office 2010 in Rs.799 Taxes :: ARTICLES ON INPUT TAX CREDIT IN VAT :: ACCOUNTING STANDARD :: TAX RATES - GOODS TAXABLE @ 4% :: empanelment :: VAT Audit :: list of goods taxed at 4%
 
 
News Headlines »
 Is government tapping your phone?
 Income tax department to use analytics to look for discrepancies in bank accounts
 GST Council fails to break deadlock over indirect tax regime, next meet on Dec 11 and 12 to hammer out differences
 Invoking Writ Jurisdiction For Income Tax Matters
 How to file income-tax returns online
 How Income Tax Returns Are Scrutinised
 All About New Income Disclosure Scheme to make Demonetisation successful
 Your deposit may draw income tax notice
 Accepting payment under IDS 2016
 New disclosure scheme could see 50% tax and 4-year limit on cash use for unaccounted deposits
 Pay 50% tax on unaccounted deposits, or 85% if caught, says Modi government

Transfer pricing adjustments: Income-tax notice to IT cos
December, 20th 2006

In a move that could have far-reaching implications on setting up new offshore units in India, the Income-Tax Department here has started issuing orders to IT and ITES captive companies relating to transfer pricing norms leading to revenue adjustments of around Rs 1,000 crore.

According to sources in the industry, these adjustments as per preliminary estimates could translate into a tax demand of between Rs 350 crore and Rs 500 crore. Sources said around 80 companies have been subjected to higher transfer pricing adjustments. The crux of the issue is the assertion of a higher margin than at those currently adopted by these companies. Most of the companies, which have been issued orders, are based out of Bangalore and Hyderabad.

Net margin

Sources said the department has benchmarked the net margin made by these captive units against public companies operating in IT/ITES sectors. The benchmark suggested by the tax authorities is around 25 per cent for IT services' companies and around 37 per cent for ITES companies. Submissions made to the tax department have sought a climb-down on such aggressive benchmarking. Sources said that if the tax authorities do not revise these margins, it could affect foreign direct inflow and India's rating as a preferred destination for setting up offshore companies.

In fact, Nasscom, the industry body, has in its pre-budget wish-list to the government also raised concern over transfer pricing norms. It has sought rationalisation of norms for transfer pricing. It also suggested the creation of an advanced pricing agreement (APA) procedure, which would allow taxpayers to disclose all relevant facts to the tax authorities and obtain a binding ruling on the tax consequences.

Transfer pricing is basically the price at which goods or services are transferred between one country and another within the same organisation.

Transfer pricing regulations have been in place in the country since 2001-02. The Indian regulations are primarily based on the OECD (Organisation for Economic Co-operation and Development) framework. Sources said that the tax authorities should, in fact, adopt uniform and fair approach rather than an aggressive approach leading to high tax demand and protracted litigation.

 
 
Home | About Us | Terms and Conditions | Contact Us
Copyright 2016 CAinINDIA All Right Reserved.
Designed and Developed by Binarysoft Technologies Pvt. Ltd.
Desktop Application Development Outsourcing Desktop Application Development Offshore Desk

Transfer Pricing | International Taxation | Business Consulting | Corporate Compliance and Consulting | Assurance and Risk Advisory | Indirect Taxes | Direct Taxes | Transaction Advisory | Regular Compliance and Reporting | Tax Assessments | International Taxation Advisory | Capital Structuring | Withholding tax advisory | Expatriate Tax Reporting | Litigation | Badges | Club Badges | Seals | Military Insignias | Emblems | Family Crest | Software Development India | Software Development Company | SEO Company | Web Application Development | MLM Software | MLM Solutions