Paper Contents
Abstract
ABSTRACT-This paper describes the idea of transfer pricing in India. Transfer pricing refers to business to business transactions, where the prices should be at arms length. The 92nd section of the income tax act provides an explanation of all the rules and regulations pertaining to arms length pricing, associated enterprise definitions and transfer pricing. Following the Finance Act of 2001, this section was added to the income tax act. It is crucial since businesses attempt to await taxes by transferring profits and eroding their bases, and the government wants to prevent losing money in this way. The paper has given a basic explanation of the concepts of transfer pricing in the Indian context. A data analysis has also been done with profit margins as the dependent variable and the intercompany transaction volume as independent variable for the Sensex companies. In conclusion, it was found that the net profit margin increases as the transaction volume between companies increases. This implies that the businesses realize economies of scale and boost their profit margins through more effective tax planning.
Copyright
Copyright © 2024 Monisha N. This is an open access article distributed under the Creative Commons Attribution License.
