A separate code on transfer pricing under the Indian Income Tax Act, 1961 (The Act), covers intra-group cross-border transactions and is applicable from 1 April 2001. In view of the code, transfer pricing has become the most important international tax issue affecting multinational enterprises operating in India. The regulations are broadly based on the OECD Guidelines and describe the various transfer pricing methods, impose extensive annual transfer pricing documentation requirements and contain harsh penal provisions for non-compliance.

Emerging markets are driving the global economy in the current world.  India has been increasingly recognised as one of the key emerging markets and is known not only for its strong offshore services sector but also for its domestic market. While on one hand, organisations are continuously developing new business strategies to meet changing market dynamics, on the other hand, tax authorities, especially in India, are responding with increased compliance requirements and ambitious audits. In such times transfer pricing (TP) has emerged as one of the largest focus area for organisations, in achieving their business objectives, and for tax authorities, to safeguard their tax bases.