I-T Dept Notifies Transfer Pricing Tolerance Range
The finance ministry has notified a tolerance range of 1% for cross-border transactions of Indian companies and their overseas associates from the arms-length price calculated by tax officers in case of wholesale trade and 3% for all others for 2012-13.The last date for filing transfer pricing returns for companies doing trade or financial transactions with their overseas associates is November 30. If the value of goods, services or intangibles declared by the Indian company falls within the stipulated range in comparison to the arms length price calculated by the tax officer, the declared value will not be questioned by the income tax department. If the department finds the actual value understated in comparison to similar transactions by unrelated parties, it makes an upward adjustment in the transfer price, leading to a tax demand. Transfer pricing refers to the price/charges at which related parties do cross-border trade of goods, services and intangibles.
Financial Express, New Delhi, 25-04-2013