Policy Measures on Transfer Pricing

Transfer pricing is one of the methods of tax avoidance. It refers to allocating expenses to high tax countries and profits to low tax countries to reduce tax liability. This is generally done within the associated companies. Transfer pricing is illegal and hurts the economy. Concept Take an example here. In 2009-10, TCS had shown […]

Draft Place of Effective Management (PoEM) Rules

Residential status of the companies is an important factor in deciding their tax liabilities. The income tax act provides that a company is resident in India if it fulfils either of the following two conditions: It is an Indian company During a particular financial year, the control and management of its affairs is situated wholly […]

Base Erosion and Profit Sharing (BEPS)

Base Erosion and Profit Sharing (BEPS) has emerged as one of the most important challenges for the governments across the world today. The globalization, privatization and liberalization has resulted into free movement of capital and labour, shift of manufacturing base from high cost to low cost locations, gradual removal of the trade barriers and rise […]

India’s Transfer Pricing Problem

Transfer Price is the price of the goods and services sold between related entities such as – parent company and daughter (subsidiary) company; or between branches of same entity. The fixing of price of goods and services between parent-subsidiary is called Transfer Pricing. Tax Avoidance Using Transfer Pricing Transfer pricing itself is not a means […]

Tax Avoidance, Tax Evasion and Tax Planning

There are three different concepts viz. tax avoidance, tax evasion and tax planning. Tax Avoidance means an attempt to reduce tax liability through legal means, i.e. to regulate one’s financial affairs in such a way that one pays the minimum tax imposed by the law. This can be understood with a simple example. Tax Evasion and […]