« Top Headlines » Open DEMAT Account in 24 hrs  How To File ITR Online - Step by Step Guide to Efile Income Tax Return, FY 2023-24 (AY 2024-25)  Old or new tax regime for TDS on salary? This post-election 2024 event will impact your tax planning  What Are 5 Heads Of Income Tax?  Income Tax Dept releases interim action plan for FY25 on tax collection, refund approvals   Income Tax Return: 5 lesser-known tax-saving tips from Section 80  Income Tax Return: 5 lesser-known tax-saving tips from Section 80  Why you need not rush to file your ITR immediately  Income tax returns: ITR-1, ITR-2, ITR-4 forms for FY 2023-24 available for e-filing  Section 80DDB tax benefits for specified illnesses: 5 things to know  Income tax slabs FY 2024-25: Five tips to help taxpayers decide between old and new income tax regimes  ITR-1, ITR-2, ITR-4 forms for FY 2023-24 (AY 2024-25) available now on e-filing income tax portal «  Tax paid by employer is not a perk: Tribunal... Family-run cos centralise HR, accounting functions... » Indian tax authorities get kudos from MNCs on transfer pricing December, 22nd 2007 Indian tax authorities have one more reason to celebrate as multinationals feel that India is better armed with 'transfer pricing' expertise than many other developed nations like the US, Germany and Japan. More than 50 per cent of the global companies, according to a survey on Transfer Pricing conducted by financial advisory firm Ernst and Young, feel that level of expertise of Indian tax authorities in dealing with the transfer pricing issues is very good. Transfer pricing is the mechanism adopted by multinationals for valuing goods and services traded with their subsidiaries or associate companies abroad so as to lower taxes and maximize profits. Based on the mechanism, the parent company values goods sold to their subsidiaries at a higher price in nations with higher taxes to show lower profits so that they pay less taxes. To ensure that multinational companies do not pay less taxes, the yardstick of Arms Length Price is adopted, by which goods sold by these firms to their subsidiaries are taken as the goods sold to independent parties and valued accordingly. According to the survey, 57 per cent respondent companies have expressed faith in the transfer pricing expertise of Indian authorities, which is significantly higher than the figures for developed countries including the US. In case of US, only 33 per cent of the respondent companies believe that American authorities have requisite expertise in dealing with transfer pricing issues. The figure was lower at 32 per cent in case of Canada and 25 per cent for Brazil. The Transfer Pricing policies of several countries are based on the Organization of Economic Cooperation and Development Guidelines on the subject. The companies in India also believe that documentation work for transfer pricing has assumed enough importance in the last two years, the survey adds. Interestingly, China one of India's economic rivals, has no laws for transfer pricing but hopefully the regulations are expected soon. India on the other hand had incorporated regulations on transfer pricing in the Income Tax Act in 2002. The regulation says, "Any income arising from an international transaction or where the international transaction comprise of only an outgoing, the allowance for such expenses or interest arising from the international transaction shall be determined having regard to the arm's length price". Overall, taxpayers have very limited experience with transfer pricing litigation, the survey said, adding only 28 instances of litigation were reported by 850 companies in 2007. Of the few cases reported, it added, a disproportionate number occurred in Germany and Canada, with each having five cases reported (collectively accounting for 36 per cent of the total).