Specified Domestic Transactions
Transfer pricing regulations introduced in India in 2001, till very recently covered only cross border related party transactions. The Finance Act, 2012 however, has extended its scope to cover certain domestic transactions with related parties within India, defined as ‘Specified Domestic Transactions’. This will principally have impact in two ways. To begin with, the pricing of the domestic transactions will need to comply with the arm’s length principle by application of one of the prescribed methods. In addition, there will be compliance and documentation obligations for such specified domestic transactions.
A synopsis of the regulations has been explained in the attached leaflet.