New Transfer Pricing Regime in Information Technology Sector

The Transfer pricing rules in India which were first introduce, in the year 2001 have been regularly modified and updated and presently with the inclusion of APA and SHR system we are having the new transfer pricing regime the rules of which are at the par with most of the advance counties the world over. Thus, we have new transfer pricing regime which is not only directed to reduce litigations between the tax departments and multinationals but also playing catalytic role in inviting more FDI into the country. These rules are applicable both tangible and intangibles. This paper, however, makes an attempt to examine how new transfer pricing will be applicable to intangible services pertaining to the information technology sector such as BPO, KPO, ITeS, etc. In this context, the paper first discusses some of the basic concepts and then examine the applicability of APA vis-a-vis SHR as the alternative approaches to be adopted by the MNCs operating in the area of Information technology