Industry perception of Indian transfer pricing – Empirical analysis

Steep growth in the international business transactions of enterprises under common control has led to adopt a disciplined approach towards Transfer Pricing regulations by the tax jurisdictions world over. UN Model Tax Convention and OECD efforts including the report on BEPS have given due significance to Transfer Pricing issues. India has been following the foot prints of the developed countries in this regard. Aggressiveness of India’s approach in its Transfer Pricing policy and practice has made the researchers to study the corporates’ views on this. The empirical study is based on the views of 150 corporates consisting of 86 manufacturing and 64 service undertakings. The study analyses India’s Transfer Pricing structure and discusses the corporates’ views. The study reveals that in general the corporate assessees are in agreement with the Indian Transfer Pricing framework; however, they expect improvement in areas like documentation requirement, disposal of appeal, cooperation of Transfer Pricing authorities with assessees, etc. The paper suggests that India should adopt international benchmarks like OECD Transfer Pricing regulations in its policy and practice.