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: articles on VAT and GST in India :: Central Excise rule to resale the machines to a new company :: ICAI offer Get Windows 7,Office 2010 in Rs.799 Taxes :: cpt :: form 3cd :: VAT RATES :: ACCOUNTING STANDARDS :: empanelment :: TAX RATES - GOODS TAXABLE @ 4% :: VAT Audit :: list of goods taxed at 4% :: ARTICLES ON INPUT TAX CREDIT IN VAT :: ACCOUNTING STANDARD :: due date for vat payment :: TDS
 
 
« Indirect Tax »
 Indirect tax receipts to see small, brief hit’
 There is no tax on interest income of up to Rs3 lakh a year for senior citizens
 Chidambaram favours change in direct tax rates
  Further rationalization of revised simplified procedure for fixation of brand rates
 Kerala to accept demonetised banknotes for payment of state tax till Nov 24
 Centre-state gridlock over GST jurisdiction remains, could threaten tax rollout
 India to levy tax on investments from Cyprus from April 2017
 Why tax radar may detect your cash deposits after Nov 8
 Income tax notices to religious, charitable trusts
 ICAI starts course on accounting technicians
 More trouble ahead as Tata Trusts get I-T summons for tax avoidance

The Income-tax Act, 1961 - Transfer Pricing - Computation of Arm?s Length Price - Clarifications on Functional Profile of Development Centres Engaged in Contract R&D Services with Insignificant Risk - Conditions Relevant to Identify Such Development Centres
May, 16th 2013

SECTION 92C OF THE INCOME-TAX ACT, 1961 - TRANSFER PRICING - COMPUTATION OF ARM�S LENGTH PRICE - CLARIFICATIONS ON FUNCTIONAL PROFILE OF DEVELOPMENT CENTRES ENGAGED IN CONTRACT R&D SERVICES WITH INSIGNIFICANT RISK - CONDITIONS RELEVANT TO IDENTIFY SUCH DEVELOPMENT CENTRES

CIRCULAR NO. 3/2013 [F NO. 500/139/2012], DATED 26-3-2013

It has been brought to the notice of CBDT that there is divergence of views amongst the field officers and taxpayers regarding the functional profile of development centres engaged in contract R&D services for the purposes of transfer pricing audit. Moreover, while at times taxpayers have been insisting that they are contract R&D service providers with insignificant risk, the TPOs are treating them as full or significant risk-bearing entities and making transfer pricing adjustments accordingly. The issue has been examined in CBDT. It is hereby clarified that a development centre in India may be treated as a contract R&D service provider with insignificant risk if the following conditions are cumulatively complied with :

1. Foreign principal performs most of the economically significant functions involved in research or product development cycle whereas Indian development centre would largely be involved in economically insignificant functions;

2. The principal provides funds/ capital and other economically significant assets including intangibles for research or product development and Indian development centre would not use any other economically significant assets including intangibles in research or product development;

3. Indian development centre works under direct supervision of foreign principal who not only has capability to control or supervise but also actually controls or supervises research or product development through its strategic decisions to perform core functions as well as monitor activities on regular basis;

4. Indian development centre does not assume or has no economically significant realized risks. If a contract shows the principal to be controlling the risk but conduct shows that Indian development centre is doing so, then the contractual terms are not the final determinant of actual activities. In the case of foreign principal being located in a country/territory widely perceived as a low or no tax jurisdiction, it will be presumed that the foreign principal is not controlling the risk. However, the Indian development centre may rebut this presumption to the satisfaction of the revenue authorities; and

 

5. Indian development centre has no ownership right (legal or economic) on outcome of research which vests with foreign principal, and that it shall be evident from conduct of the parties.

The satisfaction of all the above mentioned conditions should be borne out by the conduct of the parties and not merely by the contractual terms.

The above may be brought to the notice of all concerned.

 
 
Home | About Us | Terms and Conditions | Contact Us
Copyright 2016 CAinINDIA All Right Reserved.
Designed and Developed by Binarysoft Technologies Pvt. Ltd.
Website Ranking Website Ranking Company Website Positioning Alexa Ranking Website Promotion Website top 10 ranking website top 10 promotion search engine result promotion Strategic Internet Marketing Website Optimization Website Ranking Factors

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