The union government is seriously looking into means of protecting indigenous industries against the onslaught of unfair imports. It also, simultaneously, hopes to strengthen the customs valuation machinery. In order to ensure that indigenous industries in the country are protected against unfair imports, the union Revenue Ministry had initiated concrete steps to tackle issues related to transfer pricing.

The Income Tax department and Customs are making coordinated efforts to tackle issues arising from transfer pricing. Transfer pricing refers to a price which is not at arms length. Financial transactions of goods and services between various divisions of the same country, or between affiliates from one country to another are generally susceptible to transfer pricing practices. A large percentage of international transactions are between related parties. In such transactions, prices can be arbitrarily fixed between them. The result of these transactions is loss of revenue for customs. In fact, transfer pricing is an issue of major concern for authorities that deal with direct taxes all over the world, including authorities in India.

The Central Board of Excise and Customs (CBEC) is already coordinating with the Central Board of Direct Taxes (CBDT), and high level discussions are on between these two apex bodies of the Revenue Department, to find solutions to transfer pricing-related issues. Additionally, the Directorate of Valuation, Customs and the Directorate of Antidumping are jointly working on foolproof measures to tackle undervalued imports and imports at dumped prices.

Website: www.dov.gov

Author: Mani D'Mello

 

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