Transfer Pricing Issues to be Decided on Case-by-Case Basis

Published: 30th January 2015 06:01 AM  |   Last Updated: 30th January 2015 06:01 AM   |  A+A-

Jayant-Sinha

NEW DELHI: The government would look at transfer pricing litigations involving multi-national companies (MNCs) separately and individually and final decision on cases will decided on merit, Minister of State for Finance Jayant Sinha said here on Thursday.

Transfer pricing is the practice of arm’s length pricing for transactions between group companies based in different countries to ensure a fair price - one that would have been charged to an unrelated party - is levied.

On Wednesday, the government decided against challenging the Bombay High Court decision favouring Vodafone in the Rs 3,200 crore tax case.

The Union Cabinet on Wednesday decided to accept the Bombay High Court order of October 10, 2014, in the case of Vodafone India Services Pvt Ltd. Thus sending a signal to investors that the government was serious about its efforts to make India a friendly destination to do business.

“You cannot generalise in that regard because every case has to be look at separately and individually. Many cases are sub-judice right now. Many cases are in arbitration. So every case has to be handled on its merits,” Sinha told reporters on the sidelines of an event here.

He said in response to a query on whether the government will extend similar concessions to other MNCs which are facing transfer pricing litigations.

However, experts believe that Wednesday’s decision may also have positive implications for MNCs especially Dutch oil major Shell which had got a favourable ruling in the transfer pricing case from the Bombay High Court.

Replying another query, Sinha hoped that the government will meet the fiscal deficit target of 4.1 per cent for the current fiscal year.

“We are working through all the numbers right now...the honourable Finance Minister has said that we are following prudent fiscal policy, and we will meet our fiscal deficit target this year. I don’t anticipate any challenge,” he said.

Regarding disinvestment plan, Sinha said it  will proceed as per the Cabinet decision.

He noted that pension liabilities will become main concern for the government in the next 20-30 years.

Sinha urged private sector to participate in National Pension System (NPS). NPS was introduced in 2004 by the previous NDA government.

“We have to get more people to participate in NPS”, he said adding there was also a need to get Indian private sector and  people who are in the informal sector to participate in the scheme. He also asked Pension Fund Regulatory and Development Authority (PFRDA) to introduce more products.

(With agency inputs)

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