India has adopted Transfer Pricing Regulations since 2001 almost 10 years after opening its economy i.e. year 1991. India has emerged as one of the favourite destination for outsourcing various business processes and many MNCs have set up offices to outsource back office and support functions from India. Also in the initial years of creating presence in India MNCs resort to direct supply to India while they set up their manufacturing base. All these involve intercompany transfer of goods and services and Income Tax Act requires such transfer at Arm’s Length Price.
Indian tax law mandates contemporaneous documentation where Inter Company transaction are of INR 10 Million or more. Documentation capturing Functional, Assets and Risk (FAR) analysis and selection of most appropriate methods from available transfer pricing methods under the Income Tax Act, is must to demonstrate justification of price at which Company has dealt with its Non Resident Associated Enterprise.
We assist enterprises in Transfer Pricing Study including benchmarking and Documentation.