Are you doing related party transactions?

Cross-border transactions between the related parties (parent and subsidiary) are quite common in the borderless modern world! This has led to framing tax regulations in every country to protect the tax revenue.

In India, cross-border related party transactions are taxed as per the Transfer pricing (TP) provisions under Income Tax Act, 1961.

The large multi-national companies are aware of TP regulations. But, the smaller companies lack the knowledge about Transfer pricing or so called Arms Length pricing mechanism. They think that the amount transferred from the parent company to India is just to meet the cost of salary and rent expenses and hence, there is no need to pay Income Tax (or Corporate Tax) in India.

We, at Balakrishna and Co., Chartered Accountants, have experience of serving over 150 companies from 26 different countries. We have specialized in serving small and medium companies who setup business in Bangalore, India.