Returns, Audit and other miscellaneous provisions – Transfer pricing

Returns, Audit and other miscellaneous provisions – Transfer pricing

Records to be maintained

  • Each person who has entered into international transaction has to maintain certain information and documents in respect thereof as may be prescribed by Central Board of Direct Taxes (‘CBDT’).
  • Apart from that, if the person belongs to an International Group and if the group meets certain monetary threshold, then the person is required to additionally maintain and submit prescribed information and document regarding the international group.
  • Each person undertaking an international transaction has to maintain the following documents in accordance with Rule 10D of the Income Tax Rules, 1962.
  • Ownership structure
  • Profile of the multinational group alongwith name, address, legal status and country of residence with whom the entity has international transaction
  • Business of the assessee and industry analysis
  • Nature, terms and price of the international transaction made with AE
  • FAR analysis
  • Economic analysis and market analyses, forecast, budgets or any financial estimates prepared by the assessee relevant to the international transaction
  • Record of uncontrolled transaction taken into account for analyzing their comparability with the international transaction including the nature, terms and conditions relating to such transactions
  • A record of analysis performed to evaluate comparability of uncontrolled transactions with relevant international transactions
  • Description of the methods considered for determining ALP and method selected MAM along with explanation as to such method was so selected and how such method was applied in each case.
  • The record of the actual working carried out for determining the ALP including deails of the comparable data and financial information used to apply MAM, adjustments, if any, made
  • The assumptions, policies and price negotiations, if any which have critically affected the determination of ALP
  • Any other information, data which may be relevant.
  • The monetary threshold for the above requirements is Rs 10 million. If the person has entered into international transaction with aggregate value of less than or equal to Rs 10 million, then there is no requirement of maintenance of documentation. However, there would still be requirement to file the return of details of international transaction.

Audit Report

  • Every person who enters into an international transaction during the previous year is required to obtain a report from a Chartered Accountant and furnish such report on or before the specified date on the prescribed form 3CEB.
  • This report is in two parts. The first part of the auditor is report states that he has examined the accounts and records of the assessee relating to the international transactions entered into by the assessee during the relevant year. He also has to certify that the information furnished in the Annexure are true and correct.
  • The second part of the report contains the Annexure, carrying the particulars of the international transaction, AEs, details of transaction, MAM and ALP etc.
  • Till Assessment Year 2018-19 the specified date on which the report has to be furnished was on or before he due date under section 139(1) i.e filing of return of income which is 30th November of the relevant AY. However, in Finance Budget 2020, i.e from AY 2020-21 it is proposed to advance the due date for furnishing the report by one month before the due date under section 139(1) i.e. October 31 every year.

Ind AS Accounting Standards

Income from transaction with Non-Residents – Transfer Pricing

Transfer pricing adjustment and consequence

Dispute Mitigation strategies in transfer pricing

Advance Pricing Agreements (APA)

Fundamentals of Base Erosion and Profit Shifting – Transfer Pricing

Anti-Avoidance measures in certain jurisdictions – Transfer pricing

Mutual Agreement Procedure

Transfer pricing audit cycle

Determination of ALP – Transfer Pricing

Arm’s Length Principle – Transfer Pricing

Specified Domestic Transactions – Transfer Pricing

Secondary Adjustment – transfer pricing

International Transaction [Section 92B] – Transfer Pricing

Additional reporting by Multinational companies – Transfer pricing

Economic analysis – Transfer Pricing

Limitation of interest deductions – transfer pricing

Penalties for non-compliance – Transfer Pricing

FAR Analysis – Transfer Pricing

Introduction to Transfer Pricing