How the budget could reform transfer pricing
June 17, 2009
Tarun Arora and Shikha Gupta of PricewaterhouseCoopers outline the problems apparent in the Indian transfer pricing rules and provide suggestions for improving the regulations in the coming budget.
Data for comparability Analysis
Rule 10B(4) of the income tax rules, 1962 requires the comparability analysis to be based on comparable data pertaining to the year in which the taxpayer undertakes the international transactions with associated enterprises (current year data). Further, the use of past two year data is permitted where such past data reveals facts which could influence the determination of transfer prices of the current year (proviso to rule 10B(4) of the rules) It is worthwhile to note that the taxpayers need to have their transfer pricing analysis in place at the latest by the due date of filing the income tax return (rule 10D(4), in case of companies – September 30 following the close of relevant tax year).
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