Transfer pricing refers to the rules and methods for pricing transactions within and between enterprises under common ownership or control. Transfer pricing can be exploited for tax avoidance and tax evasion through Base erosion and profit shifting strategies. Base erosion and profit shifting refer to corporate tax planning strategies used by multinationals to “shift” profits from higher-tax jurisdictions to lower-tax jurisdictions, thus “eroding” the “tax-base” of the higher-tax jurisdictions.
According to the Indian Income-tax Act, 1961, income arising from such transactions must be computed using the arm’s length price principle, that is, the amount payable if the trading companies were unrelated or uncontrolled. A separate code on transfer pricing under Sections 92 to 92F of the Indian Income TaxAct, 1961 (the Act) covers intra-group cross-border transactions. The Act defines the terms‘international transactions’, ‘specified domestic transactions’, ‘associated enterprises’ and ‘arm’s-length price’.
TNPSC Notes brings Prelims and Mains programs for TNPSC Prelims and TNPSC Mains Exam preparation. Various Programs initiated by TNPSC Notes are as follows:-
- TNPSC Mains Tests and Notes Program
- TNPSC Prelims Exam 2024- Test Series and Notes Program
- TNPSC Prelims and Mains Tests Series and Notes Program
- TNPSC Detailed Complete Prelims Notes