Tax Scrutiny of Multinational Companies to Increase in India
The (I-T) department has notified a revised form to check for transfer pricing infractions, something that could intensify the scrutiny on their books.
The income-tax (I-T) department in Month of June 2013 has notified a revised form to check for transfer pricing infractions, something that could intensify the scrutiny on their books.
The new form clearly requires companies to release specific international transactions although in case if they do not have any impact on profits.
The tax scrutiny is meant to compel companies to unveil all business transactions such as the issue or buy-back of shares or details of restructuring. The I-T department issued notices to 26 companies, including Shell India Pvt. Ltd, HSBC Securities and Capital Markets (India) Pvt. Ltd and Standard Chartered Securities (India) Ltd, in 2012-13 for under-pricing an intra-company share sale, according to the I-T department.
As per the new revised form, there will be Transfer pricing to ensure that a fair price one that would have been charged to an unrelated party is levied. It has been an area of increasing dispute in India with the tax department aggressively pursuing such cases. The Taxpayers are now required to obtain and file an annual transfer pricing certification in Form 3CEB by 30 November2013.
The government had made several attempts to expand the definition of transfer pricing in 2012-13 budget by including domestic transactions. The tax department, through its revised reporting requirements, has now tried to plug this ambiguity.