What is Domestic Transfer Pricing?
1. Section 92BA of the TP regulations defines specific domestic transactions under TP which states that specific domestic transaction in case of the assessee means any of the following transactions-
2. Any expenditure incurred or to be incurred in connection with a payment made or to be made to a person referred to in section 40A
(2) (b).3. Transactions referred to in section 80A.
4. Any transfer of goods or provision of services as provided in subsection 8 of section 80- IA.
5. Any business transaction between the assessee and another person as referred to in subsection 8 of section 80-IA.
6. Any transactions which have been mentioned under chapter VI-A or section 10AA , or a person to whom provision of section 8 or subsection 10 of 80IA is applicable.
7. And where the aggregate of such transactions entered into by the assessee in the previous year exceeds 20 crores.
8. Any other transactions as may be prescribed.
2. Monetary threshold limit of 20 crores is to be calculated on the basis of the aggregate of payments and receipts to which these provisions apply.
3. Definition of related parties includes expenses disallowed to cover the entities which have common beneficial ownership.
4. Transfer pricing is mostly applicable to international transactions and specified domestic transactions and specifically excludes advance pricing agreement provisions.
- Profile of the Company
-Profile of the group companies
-Profile of the unit claiming tax holiday.
-Profile of all the related parties.
-Terms of the transaction
-Functional analysis specifying functions, assets and risk.
-Economic analysis containing method, selection and comparable benchmarking.
-Budgets and comparable.
-Pricing related correspondence such as emails, letters etc.
Other supporting documents
-Official publication report by government, stock exchanges.
1.Help to identify the specifically related party transactions and specified domestic transactions stemming between them which comes under domestic TP purview.
2.Help in conducting functional and benchmark analysis.
3.Assistance in developing commercially viable and fiscally efficient TP policies.
4.Assistance in documentation preparation on a timely basis as per the Indian TP Regulation.