Transfer pricing law is not new to India. It was introduced in 1962 under Section(s) 92A-F of the Income Tax Rules. Understanding what is transfer pricing will allow you to conduct transactions without the worry of paying unreasonable prices and getting cheated. Keep reading to know more.
Consult experts at NoBroker to get your property registered conveniently. Get home loans at a lower interest rate and save on your taxes. What is transfer pricing in taxation?It is a practice usually undertaken by businesses, and enterprises that conduct domestic and international transactions. Herein, pricing transactions are set within businesses and between subsidiaries that operate under common control or ownership.
In simple terms, the price of goods and services is controlled and set by companies that are part of the same larger enterprise. Transfer pricing is also used when goods or services are exchanged between divisions of the same company.
Eg. Coca-cola is a company that operates globally. The main company( larger enterprise) sets the price of services rendered between subsidiaries, and affiliates in separate countries.
This is how the company ends up saving money on taxes. The tax burden on the parent company is reduced or split into multiple subsidiaries. Transfer price applies to domestic as well as international transactions in India.
What is transfer pricing in income tax?These are prices set by the income tax department to make sure the transactions occurring between ‘‘related’ parties/ enterprises are at the same price as transactions occurring between “unrelated parties”.
This is all from my end on what is transfer pricing.
Read more:
What Is Capital Asset Pricing Model? What is Short-Term Capital Asset? How to Calculate Capital Gains Tax?
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What is transfer pricing in income tax?
Nikita
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2022-10-14T11:21:59+00:00 2022-10-14T11:22:01+00:00Comment
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