CBDT Notification on Transfer Pricing Rules

CBDT Notice on Transfer Pricing Rules, CBDT Notice of Transfer Rates Rules include “range principle” and “usage of multi-year information” to reduce litigation on transfer prices problems. Read Total notification from below.

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Government of India
Ministry of Financing
Department of Profits
Central Board of Direct Taxes


New Delhi, 20 th October, 2015

Notice of Transfer Rates Rules to incorporate “range principle” and “usage of multi-year information” to minimize lawsuits on transfer pricing issues.

The Income-tax Act attends to determination of earnings having regard to Arm’s Length Price (ALP) in case of global transactions and specified domestic transactions. The provisions of the Income-tax Act were amended through the Financing (No. 2) Act, 2014 to facilitate alignment of Indian transfer program with worldwide best practices.The way of calculation of ALP is laid down Income-tax Guidelines.

The Government has actually informed the modified Guidelines for figuring out ALP vide S.O. No. 2860 (E) dated 19/10/2015 The modified regime will apply for calculation of ALP of global deals and defined domestic transactions carried out on or after 1/04/2014

The amended guidelines permit for intro of a “variety concept” for determination of ALP and “usage of multiple year information” for carrying out comparability analysis in transfer rates cases. Deal rate revealed by the taxpayers falling within the variety will be accepted and no change will be made.The usage of multiple year data allows for annual variations to be balanced out and would therefore include value to transfer rates analysis.

The changed guidelines would therefore supply clarity in decision of rate in transfer pricing cases and decrease disagreements on transfer pricing concerns. It belongs of the Government’s continuing effort of providing a stable and specific direct tax regime.

he Notice is readily available on the site of the Department incometaxindia.gov.in.

( Shefali Shah)
Pr. Commissioner of Income Tax (OSD)
Official Spokesperson, CBDT

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