New Delhi, Jan 25 (PTI) In order to keep ahead of taxplanners and prevent tax evasion through manipulativeinvoicing, the government today said it will upgrade transferpricing norms to match the global standards.
The Directorate General of International Taxation hadearlier constituted a committee to look into the issue oftransfer pricing provisions.
"The committee will submit its report by March 2011,"Finance Minister Pranab Mukherjee told reporters today whileaddressing a press conference on the issue of black money.Under transfer pricing mechanism, money is transferredfrom one jurisdiction to the other at a specified rate forgoods and services exchanged between related entities.
Multinational companies use transfer pricing to minimise theirworldwide taxes, duties and tariffs.
"It took us sometime to gain expertise; within a shortspan of time Indian transfer pricing auditors have madeadjustments worth Rs 45,000 crore," he said.
In the past 18 months the Directorate of Transfer Pricinghas detected mis-pricing of Rs 33,784 crore, which hasprevented sifting of an equivalent amount of money outsideIndia, he added.
"As and when the economy is developing, new ways of taxevasion are also developing. We have to keep in mind, afterall those tax planners are not less intelligent than the taxdeductors. So it is a constant competition. We are alsoimproving our skill...," the Minister said.
Mukherjee said the existing provisions on transferpricing, which were introduced in 2001 were inadequate.
"There is a need to upgrade these transfer pricingprovisions to meet the challenges of growing intangibleeconomy and various cost sharing arrangements," he said. PTINKD RKL CS