Dear all
I m trying to understand the taxation on international transactions. I m confused with ALP and its computation
Pls give me clarity on this subject to get the gist of it.
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Taxation in international transactions
Replies (3)
hi yogita
not only u most of the ca r confused on this topic
Me too in need of a brief explanation. In CMA this topic is for 25 marks. Kindly make a productive reply soon.
Yoghita,
a very wide topic it is. Question is what is the purpose of the endevor to understand ALP. If the endevor is restricted to exam preparation, just stick to reference books.
If the interest is professional, then bear a few factors in mind:
1. Determination of ALP varies from industry to industry, company to company and country to country.
2. There are methods acceptable to the income-tax department with acceptable variation between actual transaction value and ALP without attracting additions to income
3. ALP is as much as a tax concept as a costing concept. You need to spend time in going through several transfer pricing studies to understand the length and breadth of the concept. Thorough understanding of the industry practices shall help you a lot on this.
To start with use this website https://www.transferpricing-india.com/Arms_Length.htm
and thereafter start reading transfer pricing commentories like OECD etc.
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