The emergence of unprecedented crisis due to Covid-19 pandemic has given rise to significant economic challenges across the world. Amidst the spread of the pandemic and the imposition of social and economic lockdowns, the world has come to an abrupt halt which has impacted production, demand and supply chain significantly.
The delayed closure of books of accounts and availability of limited comparable data in public domain affects a suitable comparable transaction. In the present situation, the use of the comparable data related to last two financial years may not be the most ideal as those years were not disrupted by COVID-19. The existing transfer pricing approach may therefore be reviewed in current scenario which may consider the impact of significant decrease in business activities. The potential comparable transactions, comparability analysis including required adjustment therefore needs to be made appropriately and the same needs to be documented so as to substantiate the results.
In light of the Covid pandemic, the reporting and disclosure requirement towards the international transactions is certainly challenging for the members of Institute of chartered accountants of India (ICAI). The ICAI through its Committee on International Taxation has been issuing guidance for its members in respect of Report under Section 92E of the Income-tax Act, 1961. The Committee has brought out the eighth edition of this Guidance Note in which all the amendments made upto Finance Act, 2020 have been incorporated.
I would like to appreciate the efforts of CA. Nandkishore Chidamber Hegde, Chairman, CA. G. Sekar, Vice-Chairman, and all members of the Committee on International Taxation of ICAI for the initiative taken to revise the said publication in a timely manner for the benefit of the members and other stakeholders at large.
I am sure that this revised and updated publication would be of immense use for our members practising in the area of Transfer Pricing in effectively discharging their professional responsibilities.
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