I-T gets power to scan related party local deals above R5 cr In a step to prevent tax avoidance, the finance ministry has given tax officials the power to audit and restate profits of specified domestic transactions above R5 crore a year between related companies and related individuals. This is similar to how tax demands are issued to MNCs when their cross-border deals are found not to have been done on an arm’s length basis.If found to be above industry standards, the government could ask companies to pay taxes on what it considers is the excess amount paid to an executive. Domestic transactions now brought under transfer pricing audits include payments made by individuals to relatives and by companies and other entities to their directors, partners or their relatives for certain expenses that are excessive or unreasonable. Besides, transfer of goods or services by industrial undertakings in infrastructure sector, that enjoy deduction of their entire profits for 10 years from taxable income, to other related businesses will be audited.
Posted on: Sat, 13 Jul 2013 10:39:54 +0000
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