Worldwide transfer pricing reference guide 2014

India (continued)
Frequency of tax audit and transfer pricing scrutiny by the tax authority (continued)
Furthermore, officers have insisted on disaggregating transactions where the taxpayer has adopted an aggregate or combined approach
to its transfer pricing documentation. During recent audits, the approach adopted by the taxpayer in the selection of comparable data
has received considerable attention from the tax authorities.
In India adjustments by the competent tax authorities with regards to transfer pricing follow the regular appellate proceedings. In many
cases, the appeals were pending at the first appellate authority for 3–5 years. Hence, to fast-track transfer pricing issues, in 2009, the
government introduced an alternative dispute resolution process. Under this process, the taxpayer may choose to approach a dispute
resolution panel in case a transfer pricing adjustment is proposed by the tax officer. The panel should dispose of the matter within
nine months. The panel’s decision which was binding on the tax officer till last year will now be appealable. This process is expected to
significantly expedite the first stage of the litigation process in India, which usually takes much longer.
APA opportunity
An APA regime has been introduced in India with effect from 1 July 2012. The APA rules provide an opportunity for taxpayers to opt
for a unilateral, bilateral or multilateral APA. The APA can be valid for a maximum period of five years, with no roll-back provision and
require payment of a specified fee. The APA filing process includes a pre-filing submission, filing the APA request itself, negotiating the
APA, execution and monitoring. Taxpayers are required to prepare and file an annual compliance report for each year under the APA,
which is subject to a compliance audit by the tax authorities.
Expected reaction to OECD Report on BEPS
The CBDT has not given any official reaction on the BEPS report.
Worldwide transfer pricing reference guide
144