Draft rules on ‘range’ concept in transfer pricing issued

NEW DELHI: The finance ministry on Thursday issued the draft scheme of proposed rules for computation of arm’s length price for international and specified domestic transactions between related entities undertaken on or after April 1, 2014.

The use of multiple-year data and the "range" concept in the transfer pricing regime is proposed to be incorporated through amendments to the income-tax rules, the ministry said in a statement. Comments and suggestions have been sought by May 31, 2015.

Finance minister Arun Jaitley had announced in his Budget speech that the "range" concept for determination of arm’s length price would be introduced in the Indian transfer pricing regime. The Arithmetic mean concept will continue to apply where the number of comparables is inadequate. The use of multiple-year data will be permitted for undertaking comparability analysis.

Section 92C of the Income Tax Act, 1961, was amended to provide for computation of arm’s length price for such transactions.