ICAI has released the 8th Edition (August 2020) of the Guidance Note on Report Under Section 92E of the Income Tax Act, 1961 (Transfer Pricing). This Guidance Note was last revised in November, 2019. The ICAI has revised Guidance note on Report under Section 92E of the Income Tax Act, 1961 (Transfer Pricing) based on the law as amended upto Finance Act, 2020.
Taxation laws pertaining to cross border transactions have always been complex as also interesting. Frequent changes in the taxation laws have made the area more dynamic. Having dynamism and the complexity involved, over a period of time, Transfer Pricing has surfaced as a distinct area of practice for our members.
The onerous responsibility of examining the records and thereafter issuing Report in Form No. 3CEB under section 92E of the Income tax Act, 1961 is being discharged efficiently by our members.
Transfer Pricing provisions have an important role to play due to the increasing participation of multinational groups in economic activities in India. The objective of transfer pricing is to curb the practices of shifting profits from associated entities in higher tax jurisdiction to associated entities in relatively lower tax jurisdiction through intra-group transactions which ultimately reduces an MNE’s worldwide taxes. The arm length price is a machinery provision which determines what an independent party would have paid/earned under the same or similar circumstances. The transfer pricing analysis cannot be effective without understanding the associated enterprises, nature of transactions, industry, other regulatory factors. Also unlike many other countries, transfer pricing documentation and reporting is a statutory obligation cast on enterprises under the Income-tax act 1961.
In order to facilitate our members in effective discharge of their responsibilities towards the reporting requirements of section 92E, the Committee on International Taxation has brought out this updated publication. This publication will benefit members and will enable them to discharge their reporting responsibilities.
The said revised 2020 edition of the the publication can be downloaded from the link https://resource.cdn.icai.org/60858citax49503.pdf
(This post is Republished with Amendments)