Consequences of Non Complaince with Transfer Pricing Regulations

TPR

Transfer Pricing Regulations

Consequences of non compliance of TPR:

During the course of assessment, based on the material or information or documents in his possession, assessing officer is of the opinion that the arm length price determined by enterprise is not reliable or correct & is resulting in lower profit (or increase in loss), the officer has right to determine correct ALP based on above information & following consequences will follow :

  • Income will be re computed based on ALP worked out by him. Sec (92C)
  • The said addition will be treated as undisclosed income & penalty ranging between 100-300% of the tax can be levied (sec 271 (1)( c ))
  • deduction u/s.10A, u/s.10B and Chapter VI-A shall not be allowed from the additional income computed by him

Section 271AA - Penalty for non maintenance of prescribed record/ documents: Prescribes for imposition of penalty equal to 2% of the value of each international transaction on account of failure to maintain information & document

Section 271BA - Penalty for failure to submit audit report within prescribed time limit: Penalty equal to Rs.1, 00,000 for failure to furnish audit report from an accountant as required u/s 92E

Section 271G - Penalty for failure to submit records / documents called for: Penalty of 2% of the value of international transaction for each failure to produce information & document as requisitioned by Income tax authorities

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