The power of survey given to Transfer Pricing officers would be used sparingly by the tax department, assured Mr. R. N. Dash, Director General, International Taxation, Government of India. He was speaking at the conference organized by the Confederation of Indian Industry (CII) on “Tax Issues in Cross Border Transactions: M&A and Transfer Pricing” in Mumbai.
Responding to S. Mahalingam, Chairman, CII National Council on Skill Development and CFO, TCS on the high amount of transfer pricing litigation, Mr. Dash said the revenue authorities were taking steps to address the situation. He, however, stressed on the point that it is the responsibility of transfer pricing department to protect India's tax base and prevent any shifting of profits outside India.
P. P. Srivastava, the Chief Commissioner of Income Tax, Mumbai urged the corporate and tax professionals to be careful while preparing financial statements. He stated that Chartered Accountants should ensure that accounts of companies should not be fudged. He also admitted that many issues related to international tax are not settled.
Mahalingam in his welcome remarks urged the Income Tax Department to introduce Advance Pricing Arrangements and Safe Harbour Provisions so that Transfer Pricing litigations and contentious adjustments to the tune of over Rs 20,000cr are reduced. He also expressed worry on the General Anti Avoidance Rules (GAAR) in the Direct Tax Code, which could again lead to lot of litigations and emphasized that corporate tax payers were looking for certainty.
Underlining the magnitude of tax issues in cross border transactions, Mr. Ketan Dalal, Executive Director, PricewaterhouseCoopers India pointed out that 70 percent of global Transfer Pricing litigations emanated from India, which needs to is a matter of concern.