India’s Transfer Pricing Guidelines/ Circulars on Identification of Contract R&D Service Provider with Insignificant Risk, and on Application of Profit Split Method Based

Dated 30th March 2013

The Rangachary Committee of government of India had submitted its report on “Taxation of Development Centres and IT Sector” on 14th September, 2012, making recommendations on the following issues:
• Parameters to identity contract R&D services provider with insignificant risk,
• Application of profit split method,
• Condition for eligibility to claim deduction under section 10A, 10AA & 10B of Income Tax Act 1961 (the Act).
After having examined the recommendations of the Committee, the Central Board of Direct Taxes (CBDT) has already issued a circular No. 01/2013 dated the 17th January, 2013 on issues relating to export of computer software under Sections 10A, 10AA, 10B of the Act.
The Government has now approved issue of circulars on identification of contract R&D service provider with insignificant risk and on application of profit split method based on the recommendation of the Committee with the following details:
– Circular on application of profit split method : Circular No. 2/2013 dated 26.3.2013
– Circular on condition relevant to identity development centres engaged in contract R&D services with insignificant risk : Circular No. 3/2013 dated 26.3.2013
These circulars will help in providing certainty to the taxpayer on issues relating to transfer pricing of development centre.

SOURCE: GOVT. OF INDIA, Ministry of Finance


About neeraj prasad

contact me on if you wish to have any clarification !!
This entry was posted in Income Tax. Bookmark the permalink.

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )


Connecting to %s

This site uses Akismet to reduce spam. Learn how your comment data is processed.