Transfer Pricing

We possess the skills needed for transfer pricing in India in the context of both.

Transfer Pricing in India applies to some of the following cross-border transactions and domestic transactions between associated enterprises and international transactions:

• Raw material purchase
• Purchase of immovable assets
• Machinery sale or purchase
• Selling off finished goods
• IT Enabled services
• Software Development services
• Technical Service fees
• Royalty fee
• Loan received or paid.
• Any form of Reimbursement paid or received.

How Transfer Pricing Works

Transfer pricing is an accounting and taxation practice that allows for pricing transactions internally within businesses and between subsidiaries that operate under common control or ownership. The transfer pricing practice extends to cross-border transactions as well as domestic ones.

A transfer price is used to determine the cost to charge another division, subsidiary, or holding company for services rendered. Typically, transfer prices are reflective of the going market price for that good or service. Transfer pricing can also be applied to intellectual property such as research, patents, and royalties.

Multinational corporations (MNCs) are legally allowed to use the transfer pricing method to allocate earnings among their subsidiary and affiliate companies that are part of the parent organization. However, companies sometimes can also use (or misuse) this practice by altering their taxable income, thus reducing their overall taxes. The transfer pricing mechanism is a way that companies can shift tax liabilities to low-cost tax jurisdictions.