Transfer Pricing Solutions and Rules - India
The Transfer Pricing Regulations (TPR) were introduced vide the Finance Act, 2001, and, are presently embodied in section 92 to 92F, section 94A and 94B and section 286 of the ITA and rules 10A-10THD of the TPR. The TPR are applicable to relevant international transactions and specified domestic transactions.
The TPR feature several concepts that are in line with the concepts of the OECD Guidelines 2017 and the regulations of certain other countries. However, other concepts are unique to the TPR, viz. a broader definition of associated enterprise, international transaction, the concept of arithmetical mean instead of arm’s length range, etc.
The Finance Act 2014 proposed to introduce the concept of range for determination of the ALP where an adequate number of comparable companies is available in the benchmarking set. It is effective for international transactions and specified domestic transactions undertaken after 1 April 2014. On 19 October 2015, vide Notification No. 83/2015, the CBDT notified final rules for comparability analysis using multiple-year data and range concept for determining the ALP in respect of international transactions and specified domestic transactions.
Following the release of the OECD Base Erosion and Profit Shifting (BEPS) Report on Action Plan 13 (Transfer pricing documentation and country-by-country (CbC) reporting), the Indian TP legislation has been amended by the Finance Act 2016 to include specific requirements in respect of CbC reporting and Master File documentation with effect from financial year 2016-17.