India's TP regime takes steps towards global best practices

Abstract

India is aligning with international norms, but much more work lies ahead. India introduced transfer pricing regulations, effective April 1 2001, via a separate code under section 92 to 92F of the Indian Income-tax Act 1961. In the time since the code was introduced, transfer pricing has become the most important international tax issue affecting multinational enterprises operating in India. Indian transfer pricing regulations are broadly based on OECD Guidelines and describe in detail the transfer pricing methods applicable; impose contemporaneous transfer pricing documentation requirement annually; and contain penalty provisions for non-compliance.