The Accountant’s report needs to be submitted with the tax authorities by the due date of • filing annual return of income. At present, the due date is 30 November. Documentation is not required to be submitted along with the Accountant’s report, but is • to be in place by the due date. It it does need to be submitted during the course of the audit/ assessment. Penal Consequences 9. What is the penalty regime for non-compliance with the regulation? A stringent penalty regime has been prescribed: Failure to maintain documents 2% of the value of the transaction • – Failure to furnish documents 2% of the value of the transaction • – Failure to report a transaction in Accountant’s report 2% of the of the transaction • – Maintaining or furnishing incorrect information or documents 2% of the of the • – transaction Adjustment for incorrect pricing 100% to 300% of the additional tax payable • – Methods for determining Arm’s Length Price 10. Are there prescribed methods to determine Arm’s Length Price? The Arm’s Length has to be determined applying any of the prescribed methods Comparable Uncontrolled Price Method (CUP) • Resale Price Method (RPM) • Cost Plus Method (C+) • Profit Split Method (PSM) • Transactional Net Margin Method (TNMM) • Or any other method as prescribed by the Central Board of Direct Taxes • Economic Analysis Comparables Search – 11. How can the search for potential comparables be conducted? Apart from internal information and comparables, external comparables may be searched in public domain such as: Websites, industry magazines and public database • Indian Databases such as Prowess and Capitaline • Documentation 12. Is any prescribed list of documentation to be maintained? The documentation would mainly include the following: Ownership structure and profile •
• The Accountant’s report needs to be submitted with the tax authorities by the due date of filing annual return of income. At present, the due date is 30 November. • Documentation is not required to be submitted along with the Accountant’s report, but is to be in place by the due date. It it does need to be submitted during the course of the audit/ assessment. Penal Consequences 9. What is the penalty regime for non-compliance with the regulation? A stringent penalty regime has been prescribed: • Failure to maintain documents – 2% of the value of the transaction • Failure to furnish documents – 2% of the value of the transaction • Failure to report a transaction in Accountant’s report – 2% of the of the transaction • Maintaining or furnishing incorrect information or documents – 2% of the of the transaction • Adjustment for incorrect pricing – 100% to 300% of the additional tax payable Methods for determining Arm’s Length Price 10. Are there prescribed methods to determine Arm’s Length Price? The Arm’s Length has to be determined applying any of the prescribed methods • Comparable Uncontrolled Price Method (CUP) • Resale Price Method (RPM) • Cost Plus Method (C+) • Profit Split Method (PSM) • Transactional Net Margin Method (TNMM) • Or any other method as prescribed by the Central Board of Direct Taxes Economic Analysis – Comparables Search 11. How can the search for potential comparables be conducted? Apart from internal information and comparables, external comparables may be searched in public domain such as: • Websites, industry magazines and public database • Indian Databases such as Prowess and Capitaline Documentation 12. Is any prescribed list of documentation to be maintained? The documentation would mainly include the following: • Ownership structure and profile
specified-domestic-transactions.docx