The Union Budget 2016—announced 29 February 2016—includes provisions introducing country-by-country reporting for transfer pricing documentation purposes.
The measures are based on Action 13 recommendations issued as part of the base erosion and profit shifting (BEPS) project of the Organisation of Economic and Commercial Development and G20 countries. India has proposed to introduce the country-by-country reporting rules pursuant to the OECD’s three-tier transfer pricing documentation approach:
These measures will be effective from Assessment Year 2017-18.
While India currently requires the preparation of transfer pricing documentation, such documentation is only required to be prepared by the due date when the return is filed and then is only to be furnished during assessment proceedings, typically a few years later. The country-by-country reporting rules would revise this rule, and require that the documentation must be furnished at the time the return is filed. This fact, coupled with the limited period (eight months) allowed from the end of the financial year (31 March 2017) to prepare such extensive documentation, could pose a challenge for taxpayers preparing this documentation for the first time.
Read a March 2016 report [PDF 300 KB] prepared by the KPMG member firm in India: Budget 2016 – Transfer Pricing Amendments
The KPMG logo and name are trademarks of KPMG International. KPMG International is a Swiss cooperative that serves as a coordinating entity for a network of independent member firms. KPMG International provides no audit or other client services. Such services are provided solely by member firms in their respective geographic areas. KPMG International and its member firms are legally distinct and separate entities. They are not and nothing contained herein shall be construed to place these entities in the relationship of parents, subsidiaries, agents, partners, or joint venturers. No member firm has any authority (actual, apparent, implied or otherwise) to obligate or bind KPMG International or any member firm in any manner whatsoever. The information contained in herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. For more information, contact KPMG's Federal Tax Legislative and Regulatory Services Group at: + 1 202 533 4366, 1801 K Street NW, Washington, DC 20006.