Transfer Pricing
This query is : Resolved
05 June 2010
FOR BPO, UNDER COST PLUS CONTRACT METHOD (Parent Co. - in UK, Subsidiary - in INDIA):
1)Please suggest the markup rate (in percentage) at par with the industry.
2)What are the expenses, allowable from the markup portion.
3)What are the expenses includable in the cost.
4)Please suggest tax planning.
1)Please suggest the markup rate (in percentage) at par with the industry.
2)What are the expenses, allowable from the markup portion.
3)What are the expenses includable in the cost.
4)Please suggest tax planning.
05 June 2010
Dear Parthasarathi,
To be frank in the current trend set by the income tax department- especially transfer pricing department, any amount of net margin below 30% to 35% is not acceptable by them, atleast in Bangalore.
Also it is not practically possible to comment on the mark up for BPO industry as they are so many sectors within BPO industry & within each sector there are so many other factors like risk, asset employed and functions performed which will influence the margins/markup.
However personally i feel a net markup or margin in range of 25-30% must be good enough to overcome the hurdles posed by IT dept. Since it is net margin, there is no scope of reduction of further expenses & cost shall include all the cost including dep on fixed asset. I hope ur first 3 queries are resolved.
wrt tax planning, it is not feasible to comment on same w/o a detailed study of the co & its related industry. For further details pls feel free to contact me at kanti.salecha@gmail.com
Regards
Kanti Jain
To be frank in the current trend set by the income tax department- especially transfer pricing department, any amount of net margin below 30% to 35% is not acceptable by them, atleast in Bangalore.
Also it is not practically possible to comment on the mark up for BPO industry as they are so many sectors within BPO industry & within each sector there are so many other factors like risk, asset employed and functions performed which will influence the margins/markup.
However personally i feel a net markup or margin in range of 25-30% must be good enough to overcome the hurdles posed by IT dept. Since it is net margin, there is no scope of reduction of further expenses & cost shall include all the cost including dep on fixed asset. I hope ur first 3 queries are resolved.
wrt tax planning, it is not feasible to comment on same w/o a detailed study of the co & its related industry. For further details pls feel free to contact me at kanti.salecha@gmail.com
Regards
Kanti Jain
Message likes :
1 times
You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now
Click here to login now
Similar Resolved Queries
Unanswered Queries
- ITR 2 Short Term gain & Long term gain
- Reporting Income under Section 44ADA
- Itr 1 processing
- Off Market debit and credit transaction
- Showing Gift from relative in ITR for this year
- Share accounting-->fifo - capital gain - period as per fifo?
- ITR selection for salaries and capital gain less than L
- Short Term Capital gain on shares bought and sold after 2018 onwards
- ITR 1: Details for showing Exempt Income
- ITR returnFY25-26
- ITR validation error - Balance sheet is not filled
- Gst invoice numbering and delivery challan numbering
- Sales amount in Gstr1
- E Commerce GSTR1 & 3B how to file
- GST Cancellation without jurisdiction
- Legal Opinion on Registrar's Refusal to Investigate a Society for Non-Renewal and Non-Compliance
- GST Refund_RFD-01
- Form10BD was uploaded successfully without any Error but after 24 hours, Form10BE are not available
- Annexure B utility for GST Refund
- Tax amount diff in Gstr1 and 3B in tax compare reports
Trending Online Classes
-
DT & Audit (Exam Oriented Fastrack Batch) - For May 26 Exams and onwards Full English
CA Bhanwar Borana & CA Shubham Keswani
Subscribe to Pro
Join an elite circle of professionals
CAclubindia
