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: VAT Audit :: articles on VAT and GST in India :: VAT RATES :: empanelment :: ACCOUNTING STANDARD :: TDS :: due date for vat payment :: cpt :: ACCOUNTING STANDARDS :: ICAI offer Get Windows 7,Office 2010 in Rs.799 Taxes :: list of goods taxed at 4% :: TAX RATES - GOODS TAXABLE @ 4% :: form 3cd :: Central Excise rule to resale the machines to a new company :: ARTICLES ON INPUT TAX CREDIT IN VAT
 
 
Direct Tax »
 In some instances, filing of income tax return may not be mandatory
 Best 5 Income Tax-Saving SIP plans in India: How To save taxes by Investing in SIPs under 80C
 Tax refund checks are finally in the mail
 Income Tax dues in advance can be paid at RBI or at authorised bank branches by March 2017
 Why you must be looking beyond tax planning
 I-T dept. to lauch app for paying tax
 CBDT to taxman: Step up TDS survey operations to boost collections
 Tax Officers Asked To File Self-Appraisal Report On E-Assessment
 CBDT to taxman: Step up TDS survey ops to boost collections
 Govt to issue exemption list on new tax for unlisted firms
 CBDT issues third round of certificates to tax payers

Tax scrutiny of multinational companies to increase
June, 14th 2013

In what could further spook multinational companies (MNCs) operating in India, the income-tax (I-T) department has notified a revised form to check for transfer pricing infractions, something that could intensify the scrutiny on their books.

The new form explicitly requires companies to disclose specific international transactions even if they do not have any impact on profits.

Analysts said this will force companies to disclose all business transactions such as the issue or buy-back of shares or details of restructuring.

Transfer pricing refers to the practice of arm’s length pricing for transactions between group companies based in different countries to ensure that a fair price—one that would have been charged to an unrelated party—is levied. It has been an area of increasing dispute in India with the tax department aggressively pursuing such cases.
The government had attempted to widen the definition of transfer pricing in last year’s budget by including domestic transactions and making it clear that it wasn’t necessary that international transactions should have a tangible impact on income to come under the purview of transfer pricing provisions.

However, the tax department had not effected any changes in the reporting requirements last year, which enabled many companies to avoid disclosing such transactions. Taxpayers are required to obtain and file an annual transfer pricing certification in Form 3CEB by 30 November.
The tax department, through its revised reporting requirements, has now tried to plug this loophole.

The revision in the format comes in the backdrop of the tax department’s increased scrutiny on share valuation cases in its audits last fiscal. The I-T department issued notices to 26 companies, including Shell India Pvt. Ltd, HSBC Securities and Capital Markets (India) Pvt. Ltd and Standard Chartered Securities (India) Ltd, in 2012-13 for under-pricing an intra-company share sale, according to the I-T department.

“Most of the companies were taking a stand that purchase or sale of shares between group companies did not lead to any taxable income and refrained from reporting such transactions. Now, the income-tax department has inserted this specific disclosure requirement in this form. Companies will have no option but to disclose such transactions,” said Karishma Phatarphekar, partner and practice leader (transfer pricing services) at Grant Thornton India LLP. “The companies will even have to file business structuring agreements along with this revised transfer pricing form, something that was not required till last year.”

Many firms undertake business reorganizations that may lead to a reduction in the profits of the Indian entity. They will now have to file their detailed business structuring agreements with the tax department.

As per a 10 June notification from the Central Board of Direct Taxes regarding international transactions, separate requirements have been introduced for guarantees, issue of equity shares, business restructuring or reorganizations and deemed international transactions.

With respect to domestic transactions, a separate section has been introduced in the form, seeking information on details of the associated enterprises, including business description, the nature of the relationship, description of the transaction, along with quantitative details and the transfer pricing methodology, PricewaterhouseCoopers said in a note.

 
 
Home | About Us | Terms and Conditions | Contact Us
Copyright 2017 CAinINDIA All Right Reserved.
Designed and Developed by Binarysoft Technologies Pvt. Ltd.
Multi-level Marketing MLM India Affiliate Marketing Affiliate Marketing Software MLM Software MLM Solutions Multi level marketing solutions MLM Servi

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