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  • Domestic Transfer Pricing

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    This document discusses specified domestic transactions and transfer pricing between related parties in India. It defines relatives under section 40A(2)(b) of the Income Tax Act to include spouse, children, parents, grandparents, grandchildren, brothers, sisters, and their spouses. A case study examines a loan between two related companies, A-1 Ltd and A-2 Ltd, where the interest rate was 18% but the arm's length price (ALP) was determined to be 11%. Issues include the tax impact for the companies and potential transfer pricing adjustment of 7%.

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    Transfer Pricing

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    This document discusses specified domestic transactions and transfer pricing between related parties in India. It defines relatives under section 40A(2)(b) of the Income Tax Act to include spouse, children, parents, grandparents, grandchildren, brothers, sisters, and their spouses. A case study examines a loan between two related companies, A-1 Ltd and A-2 Ltd, where the interest rate was 18% but the arm's length price (ALP) was determined to be 11%. Issues include the tax impact for the companies and potential transfer pricing adjustment of 7%.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PPTX, PDF, TXT or read online from Scribd
    Flag for inappropriate content
    Download as pptx, pdf, or txt
    10 views6 pages

    Domestic Transfer Pricing

    Uploaded by

    shahbhavya2811
    This document discusses specified domestic transactions and transfer pricing between related parties in India. It defines relatives under section 40A(2)(b) of the Income Tax Act to include spouse, children, parents, grandparents, grandchildren, brothers, sisters, and their spouses. A case study examines a loan between two related companies, A-1 Ltd and A-2 Ltd, where the interest rate was 18% but the arm's length price (ALP) was determined to be 11%. Issues include the tax impact for the companies and potential transfer pricing adjustment of 7%.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PPTX, PDF, TXT or read online from Scribd
    Flag for inappropriate content
    Download as pptx, pdf, or txt
    of 6

    TRANSFER PRICING

    SPECIFIED DOMESTIC TRANSACTIONS

    BCAS - CA Bhavya Haria

    Relatives u/s 40(A)(2)(b)

    INDIVIDUAL: Definition of Relative as per S. 2(41)


    Brothe r/ Sister
    Childre n Parent s

    Individual makes payment to


    Spous e Grand Parents

    Contd.
    Partner

    Firm:
    Wife, Brother, Sister, Son, Daughter, Parents, Grand Parents and Children

    Case Study 1

    A-1 Ltd.

    LOAN

    A-2 Ltd.

    > 5 crores

    INTEREST RECOVERED @ 18%

    ALP = 11%

    Case Study 1 (Contd.)

    Facts 1. A-1 Ltd. and A-2 Ltd. are related parties u/s 40(A)(2)(b).
    2.

    ALP has been calculated conducting the benchmarking analysis and the relevant price adjustments have been made to the Interest Rate.
    No explanation for higher rate @ 18%.

    3.

    Case Study 1 (Contd.)

    Issues 1. Impact of DTP in hands of A-1 Ltd. & A-2 Ltd. 2. TP Adjustment @ 7 %
    3.

    ALP has been calculated conducting the benchmarking analysis and the relevant price adjustments have been made to the Interest Rate.
    No explanation for higher rate @ 18%.

    4.

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