After the fourfold increase in ease of facilitating business beyond the borders of any nation, the rules
for transfer pricing are highly important in nature for all large-scale global businesses. Transfer
pricing has become highly crucial to ensure fair and equitable distribution of profits while complying
for tax regulations. The Transfer Pricing (TP) Regulations were introduced in India in the year 2001,
in order to prevent erosion of Indian tax base. The Indian TP Regulations are contained in Chapter X
of the Income-tax Act, 1961 (“the Act”) under the title “Special Provisions relating to avoidance of
tax”. In 1990s, India’s former finance minister introduced new reforms for more opening of the
Indian economy thus opening up our borders to a more business conducive environment from all
around the globe. This led to an increase in the interests from the FDI from MNCs. The general rules
and regulations are generally based on OECD (Organisation for Economic Co-operation Development
Guidelines. There are various guidelines given which prescribe different transfer pricing methods,
the principle of ALP and the documentation requirements as well as the tax procedures and
compliances requirements.
Navigating the complex arena of transfer pricing regulations is one of the most important tasks for
any organisation to go global. Hence, we bring to you some innovative insights to guide you through
the same.
