Budget 2013: Restore tolerance band's earlier limit of 5%, demands OPPI

NEW DELHI: In the Budget 2013, the Organisation of Pharmaceutical Producers of India ( OPPI) proposes that tolerance band should be restored to the earlier limit of 5 per cent.

OPPI brought to notice that by Finance Act, 2011 the Government sought to replace the 5 per cent range as was provided in the second proviso to Section 92C(2) with such per cent as would be notified by the Central Government. "In the Finance Bill 2012 it is now proposed that such per cent to be notified by the Central Government cannot exceed 3 per cent," added OPPI.

OPPI says that the Indian transfer pricing regulations advocate the use of arithmetic mean for computation of Arm’s Length Price and not the inter-quartile range largely restricting the leeway available to the taxpayers.

"Further, limiting the tolerance band to 3 per cent tends to be extremely restrictive, thereby requiring the taxpayers to be extremely rigid with their pricing which may not be commercially feasible," OPPI said.