ECONOMICS

Detailed explanation-1: -The Transfer Pricing (TP) Regulations were introduced in India in the year 2001, in order to prevent erosion of Indian tax base. The Indian TP Regulations are contained in Chapter X of the Income-tax Act, 1961 (“the Act”) under the title “Special Provisions relating to avoidance of tax”.

Detailed explanation-2: -Transfer Pricing was introduced through inserting Section(s) 92A-F and relevant Rule(s) 10A-E of the Income Tax Rules 1962. It ensures that the transaction between ‘related’ parties is at a price that would be comparable if the transaction was occurring between unrelated parties.

Detailed explanation-3: -[4] The term “transfer pricing” refers to the value placed on the transfer of goods, services, and technology between connected companies as well as the value placed on the transfer of goods, services, and technology between unrelated parties that share common ownership or control. Globally, tax rates vary greatly.