New Indian rules allow use of multiple year data and range concept for transfer pricing

The Indian government has published final transfer pricing rules that allow use of multiple year data for comparability purposes and introduce the use of a range to determine arm’s length price in many cases.

The new rules, applicable from April 1, 2014, implement changes made in Finance (No. 2) Act, 2014, replacing India’s practice of only allowing data from the year of the transaction and its use of the arithmetic mean in all cases.

Finance Minister Arun Jaitley first announced an intent to introduce the changes in July 2014, stating that the government believed the amendments would reduce transfer pricing litigation and align India’s transfer pricing regime more closely with global best practices.

A draft version of the rules was released for public comment in May.

See:

• Notification

• Release

Related MNE Tax articles:

• Draft Indian transfer pricing rules permit use of range and multiple year data

• India announces transfer pricing reforms, disappoints on indirect share transfers