The Institute of Chartered Accountants of India (ICAI) has issued a guidance note on the report under section 92E of the Income-Tax Act, 1961.
The ICAI through Committee on International Taxation has been issuing guidance for its members in respect of the Report under Section 92E of the Income-tax Act, 1961. The obligation of the members of ICAI is to express opinion on the accounts, records and documentation pertaining to international transactions and specified domestic transactions and therefore, it is expected from the members to have a through knowledge of transfer pricing and recent developments. The Committee has brought out the ninth edition of the Guidance Note on Report under Section 92E of the Income-tax Act, 1961 in which all the amendments made upto Finance Act, 2022, have been incorporated.
After opening up the economy the Government of India took note of the possibility of manipulation of transfer pricing resulting in shifting of income out of India on the one hand, and inadequacy of the then taxation regulations in dealing with that, on the other hand. Consequently, to deal with such situations in an effective manner, the Government, in 2001, introduced comprehensive transfer pricing regulations as Chapter X of Income-tax Act,1961(the Act), which deals with special anti-avoidance provisions regarding international transaction. One of the innovative measures to ensure self-compliance of the regulations was incorporation of requirement of filing of accountant’s report as per section 92E of the Act read with Rule 10E of Income Tax Rules, 1962 in Form 3CEB.
Even though the duty to comply with the transfer pricing regulation rest upon the taxpayer, the responsibility of accountant is to examination of documents and information and provides report thereon. In this revised publication the committee has covered all the important update related to associated enterprises, international transactions, guidance related to selection of most appropriate methods, computation of ALP, adjustment thereof and documentation etc.
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