MNCs Under Transfer Pricing Scanner for profit und

Posted @ February 16, 2012, 8:20 am under (INTERNATIONAL TAXATI)

After mopping up over R33,000 crore from transfer pricing route in the last two years, the income tax department is now focussing on multinationals in pharma, shipping and diamond sectors, which transfer profits to parent or associate firms in low tax jurisdictions for reducing the tax liability in India. The income tax department is studying these sectors as it believes that parent firms of these MNCs abroad are not selling goods and services to subsidiary companies in India at the arm’s length price, but at an artificially set higher price. This allows the company incorporated here to depress its profits and evade tax. “We have found instances in these sectors where companies are not following the arm’s length principle and so we are studying their transactions carefully,” a finance ministry official told FE.