We are parent company head quartered in India and having one subsidiary Indonesua based overseas enterpeises PTE Ltd , who also act as our international buying interface as a Trader for us and any trader. Definitely, their profit is in built in Invoice.......
They are also in ocean logistics for intetnational trade. My query is for freight payment , besides 15CA,CB Forms, do we require to report to RBI and maintain ALP per independent related party transaction norms.
Please guide.
| International transactions between group companies (related party cross-border transactions) attract multiple layers of compliance: 1. Transfer Pricing (Section 92-92F of IT Act): - All international transactions between associated enterprises must be at arm's length price - Maintain Transfer Pricing documentation per Section 92D - File Form 3CEB (CA certificate) under Section 92E before ITR filing - Covered transactions: Goods, services, royalties, loans, guarantees, cost sharing, management fees, etc. 2. FEMA Compliance: - All payments and receipts must flow through Authorised Dealer (AD) banks - Overseas Direct Investment (ODI) to group companies: File OI-1 (formerly ODI Form) with RBI via AD Bank - FDI received from foreign group company: File FC-GPR within 30 days of share allotment - ECB (External Commercial Borrowings) from group companies: Follow RBI ECB guidelines, file ECB-2 monthly return - Trade credit: Import payments beyond 6 months require RBI approval 3. Customs / DGFT: - Import/export prices between related parties are subject to Customs Valuation scrutiny — Rule 3 of Customs Valuation Rules requires arm's length price for related party transactions - DGFT may scrutinise related party export prices if value appears understated 4. GST: - Import of services from group companies abroad: IGST payable under RCM (Section 5(3) IGST Act) — even if services are free of charge, if the supply is between related persons and benefits the Indian entity, it is deemed a supply - Export of services to group company: Must meet all 5 conditions of export of services including arm's length consideration 5. Income Tax — WHT: - Any payment to foreign group company (royalty, technical fees, management fees, interest) is subject to withholding tax under Section 195 — obtain Form 15CA/CB before remittance |
CAclubindia
