Govt may introduce advance pricing rules
Monday, March 3rd, 2008Rules for advance pricing arrangements are likely to be introduced in India with an eye on reducing transfer pricing litigation between corporations and tax authorities.
An announcement to this effect is expected either in Budget 2008-09 or in the direct tax code that is likely to be introduced later.
Transfer pricing legislation was introduced in India in 2001 and has emerged as the single biggest source of courtroom battles between Indian tax authorities and companies, a large number of which are multinationals with operations in India.
Tax specialists and industry have been demanding clear-cut advance pricing mechanisms that will allow them to determine the valuation of related party transactions.