Indian Accounting Standards and Transfer Pricing | KPMG | IN

Indian Accounting Standards and Transfer Pricing

Indian Accounting Standards and Transfer Pricing

The difference in the fundamental accounting methodology applicable to companies is likely to pose various challenges from a transfer pricing perspective, which have been discussed in the report.

1000

Also on KPMG.com

ind-as-transfer-pricing

The Ministry of Corporate Affairs (MCA), through its notification dated 16 February 2015, issued the Indian Accounting Standards (Ind AS) and recommended its application in a phased manner from 1 April 2016.

The onset of Ind AS has an impact on various areas, one of which is Transfer Pricing.  This is because a company transitioning from the existing Indian Generally Accepted Accounting Principles (AS) to Ind AS would experience a change in various performance measures impacting the determination of arm’s length price for a Company following AS vis-à-vis a Company following Ind AS.

The difference in the fundamental accounting methodology applicable to companies is likely to pose various challenges from a transfer pricing perspective. This report outlines the various impact areas.

Some of the issues covered in the report are as follows:

  • Impact on positions adopted under transfer pricing for companies transitioning to Ind AS, especially considering the need to recognize various elements of the financial statements at fair value, and emphasis on substance of transactions;
  • Need for adjustments while conducting benchmarking analysis;    
  • Evaluation of Associated Enterprise relationship for the purpose of Transfer pricing from the perspective of ‘control’ under Ind AS;
  • Interplay between General anti-avoidance rule (GAAR) and Ind AS on re-characterisation of financial instruments;
  • Impact on Advance Pricing Agreement (APA) as a result of transitioning to Ind AS.  

© 2017 KPMG, an Indian Registered Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

Connect with us

 

Request for proposal

 

Submit