The Hindu : Business : Govt. makes transfer pricing adjustments

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Saturday, Sep 23, 2006
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Govt. makes transfer pricing adjustments

Special Correspondent

NEW DELHI: The Union Finance Ministry has made transfer pricing adjustments in the order of Rs. 3,500 crores in the first two years of its operation that started in from 2004-05, according to Revenue Secretary K. M. Chandrasekhar.

"In the first year of transfer pricing audit, out of 1,000 cases audited by transfer pricing officers (TPOs), adjustments in transactions of about 250 cases were made, involving addition in income to the tune of Rs. 1,200 crore,'' Mr. Chandrasekhar said while inaugurating the Associated Chambers of Commerce and Industry of India (Assocham) organised `National conference on transfer pricing.'

He said similarly in the second year the TPOs audited about 1,500 cases and adjusted prices in about 350 cases, resulting in addition of Rs. 2,300 crore adding that the procedure and the method of implementing the norms were still at a nascent stage.

As the regime gains maturity, the Revenue Secretary said the Government would undertake more and more transfer pricing audit.

He made it clear that every transaction of a related party was not subjected to transfer pricing audit. "The audit in such cases at present get triggered on the basis of volumes of international transactions, Mr. Chandrasekhar said.

However, a major challenge in implementation of transfer pricing regulations is non-availability of a reliable data bases, which offered suitable comparables with regard to cross-border transaction.

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