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Proposed transfer pricing to cover capitalisation rules
Our Corporate Bureau
Mumbai, March 4 : The proposed legislation on the transfer pricing, tabled along with the Budget 2001-02, would also cover capitalisation rules which did not exist earlier in India. It would also apply to sharing of expenditure taking into account the benefits derived from it."For example whether a project with 10 per cent equity and 90 per cent debt is appropriate, or whether the foreign company is trying to earn interest out of the project, would be computed under transfer pricing," PricewaterhouseCoopers (PwC) managing partner Rathin Datta said at a post-Budget panel discussion jointly organised by the Confederation of Indian Industry (CII) and PwC in Mumbai, on Friday.Transfer pricing, broadly is income from international transactions between associated enterprises (with wide definitions) to be computed at arm's length price. Arms length price would be determined by any of the methods which include, comparable uncontrolled price, resale price, cost plus, profit split, transaction net method or any other method opted by CBDT, Mr Datta added. Most importantly, arms length price would be computed at the time of entering into such transaction. The accountants report in prescribed form would have to be submitted within due date of return, he said. Copyright © 2001 Indian Express Newspapers (Bombay) Ltd.
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