Transfer Pricing-Year End Adjustment
Transfer pricing year end activities refer to the activities that companies undertake to comply with transfer pricing regulations and requirements at the end of their financial year. True-up and true-down adjustments are common practices in financial planning and forecasting in India, and are used to reconcile the actual financial results of a company with the budgeted […]
Unwrapping the Issues around AMP Expenditure
There are numerous activities which are carried out by the Indian subsidiaries of foreign entities including manufacturing of goods, advertising, marketing, promotion, etc. Deduction for all the expenses incurred for the business is allowed in accordance with Section 37 of the Income Tax Act, 1961 (hereinafter referred as “The IT Act”). While computing the Profits […]
Transfer Pricing Agreement
Transfer pricing is a term used to describe the pricing of goods, services,and intangible assets that are transferred between related entities or companies. This practice is used to determine the value of goods or services that are transferred between affiliated entities, which are typically located in different countries, and can be used to manipulate tax […]
Royalty and Transfer Pricing
Intercompany Royalty Royalty is a consideration received by the owner of an intangible right or knowhow under license in any technology transfer. Such intangibles may be of two types which are trade intangible and marketing intangibles. Trade intangibles include patents, knowhow, designs and models used for production of goods and services and computer software. Marketing […]
Organizing Transfer Pricing
Transfer pricing is the practice of setting the prices for the transfer of goods, services, or intellectual property between companies that are part of the same group. Effective transfer pricing planning and set up can help multinational companies to manage their tax liabilities, reduce the risk of tax audits, and promote a better understanding of […]
Goodwill Amortization
Prepared by Khusbu M Kinger 1.Background Goodwill arising on business acquisition is recognized in the books of the acquirer as an Intangible asset as per the recognition criteria mentioned under IGAAP/IND AS. Subsequent to the amendment made in the Income Tax Act to exclude Goodwill from the Intangible asset definition, the depreciation pertaining to such […]
Employee Stock Option Plan (ESOP)
The treatment of ESOP for financial reporting and tax purposes is complicated. On top of that complexity, how ESOP expenses and deductions are treated can vary depending on where a company pays the compensation. Layering on transfer pricing rules and the views and approaches of tax authorities around the world, the treatment of ESOP in transfer pricing […]
Business Restructuring and its Transfer Pricing Implications
Background Multinational Enterprises (MNEs) often engage in cross border business restructurings or supply chain adjustments to enhance operational efficiencies, achieve improved synergies, and maintain competitiveness. These changes might involve relocating functions, assets, or risks (FAR) among the entities within the group. One question that arises is whether relocating the FAR requires paying an exit charge […]