India is suffering from the menace of Transfer pricing. What is “Transfer Pricing”?

Answer: [A] It is a method of tax-dodging by illicit capital flows outside the country.

Commercial transactions between the different parts of the multinational groups may not be subject to the same market forces shaping relations between the two independent firms. One party transfers to another goods or services, for a price. That price is known as “transfer price”. It is mainly done for tax-dodging in a country.

This question is a part of GKToday's Integrated IAS General Studies Module