Mitigate Financial Risk Through Transfer Pricing Services in India
Running a national or international business is no easy feat; there are many rules, conditions and regulatory compliances that business owners should be aware of. The rising number of transactions within companies has turned transfer pricing into a leading risk management trap for businesses. India, being the economic powerhouse has a diverse marketplace with many emerging companies; aligned with that, there are new policies to keep businesses in check as well.
What’s Transfer Pricing?
The price settings of goods and services sold between separate enterprises within a company are known as transfer pricing. Simply put, transfer pricing is intra-corporate transactions. Let’s say a subsidiary company sells supplies (goods) or provides labour (service) to the parent company. The cost paid by the parent company to the subsidiary company is what we call transfer pricing. It is imperative that business owners clearly understand transfer pricing, however, complex the idea may seem at first.
Why Is It Important to Know About Transfer Pricing?
Some companies try to manipulate tax payments on other countries that are going through money fluctuation. If you are found guilty of abusing taxes intentionally or unintentionally, you could face massive tax liabilities, penalties and endure the reputation damage of your business. Nowadays, to combat tax avoidance, many countries have implemented strict rules on transfer pricing. Therefore, this necessitates the need for you to comprehend and navigate transfer pricing with utmost caution.
Transfer Pricing in India
In 2001, the government of India had imposed the meticulous Transfer Pricing Laws that introduced the issue of transfer pricing to prominence amongst the plethora of multinational organizations in India as well as Indian companies. Since the introduction of Sections 92 to 92F of the Indian Income Tax Act, 1961 (the Act) which covers intra-group cross-border transactions and specified domestic transactions, transfer pricing has become the nation’s most crucial international tax issue regarding the multinational enterprises. Using the Organisation for Economic Co-operation and Development (OECD) Guidelines as a basis, the regulations describe transfer pricing methods, annual documentation requirements and not forgetting, heavy penal provisions for noncompliance as well.
Failure to comply with proper taxing will result in a huge drawback for your business. Regardless of the size of your business, whether it is small to medium or big, companies need a reputable and dependable transfer pricing policy, which takes the umbrella company’s whole business strategy and the systemized operating structure into account.
How Can I Start Transfer Pricing Services in India?
3E Accounting India is the premier accounting and taxing firm that has been the first choice of many companies around the globe to delegate transfer pricing. We understand that you may have concerns regarding the possible risks of transfer pricing, which is why 3E Accounting India is here to help you manoeuvre the complex nature of business. Our multi-disciplinary team of professionals are the best in their field, ranging from auditing, legal, accounting and human resource are assembled to solve your taxation headaches. Consult us to know more about 3E Accounting India’s transfer pricing services!