Transfer Pricing: In Indian Taxation System

Siddharth Agarwal, Amity Law School, Noida

ABSTRACT

Transfer pricing is a critical facet of international taxation and plays a pivotal role in the global economy. It refers to the pricing of goods, services, intangibles, or financial transactions between related entities, often operating in different tax jurisdictions. The accurate determination of transfer prices is vital for both multinational corporations and tax authorities, as it directly impacts tax liabilities, trade balances, and the allocation of profits among different jurisdictions. The article suggests the importance and scope of transfer pricing which includes the meaning of arm’s length principle, transfer pricing methods, regulation of transfer pricing, process for risk management etc.

Moreover, transfer pricing is a multifaceted area of international taxation that impacts both multinational enterprises and governments. Effective transfer pricing practices are essential for ensuring fair and transparent allocation of profits and for maintaining a stable and predictable business environment in the global economy. This overview provides a foundation for understanding the key concepts and challenges associated with transfer pricing.