Specified domestic transactions - Transfer Pricing

1. Taxpert Professionals
Transfer Pricing - BE IN THE KNOW
TOPIC – SPECIFIED DOMESTIC TRANSACTIONS

2. Specified Domestic Transactions
The aim behind introducing transfer pricing provisions was to curb tax evasion i.e. tax international transactions on their real value. This however left
a vacuum for similar transactions that are domestic but do not portray correct taxable value (as in the case of international transactions). The urge to
include certain specific transactions within the ambit of transfer pricing provisions was expressed by the Hon’ble SC in the case of CIT Vs. Glaxo
SmithKline Asia. The Finance Act, 2012 introduced a new section 92BA by which the provisions of chapter X of the Act were extended to Specified
Domestic Transactions (SDT). The term “Specified domestic transactions” as defined under section 92BA of the Act, means any of the following
transaction not being an International Transaction.
In case of the transactions listed above, the aggregate value of such transactions entered into by the assessee in the previous year should exceed a sum
of Rupees Twenty crore (w.e.f assessment year 2016-2017)
Conditions to qualify as SDT (all the conditions need to be fulfilled)
• The transaction should fall within the category of any one of the transactions listed above
• The transaction is not an “International Transaction”
• The aggregate value of transactions entered into by the assessee in the previous year
• Transaction should be between related resident parties.

3. Type of transactions covered under SDT
Clause
of section
92BA
Sections referred to in section
92BA
Whether SDT related to Income /Expenditure
covered?
Whether inter-unit transactions
covered/only entity-entity transactions
covered
(i)
(Omitted via
Finance Act
2017)
40A(2)(b)
Expenditure in respect of
payments to specified persons
i.e. person specified in section
40A(2)(b)
Only expenditure from related parties covered and
income from related parties is not included.
Transactions involving two units of same
entity (inter-unit transactions) not covered.
Only transactions between distinct entities
which are related parties are covered.
(ii) 80A
Transactions in respect of
goods and services 80A(6)
Only transactions in respect of goods or services
are covered by deduction 80A(6).Both income and
expenditure are covered.
Transactions involving two units of same
entity (inter-unit transactions) only covered.
(iii) 80-IA (8)
Transfer of goods and
services
Only transactions in respect of goods or services
are covered. Both income and expenditure are
covered.
Transactions involving two units of same
entity (inter-unit transactions) only covered.
(iv) 80-IA (10)
Business transacted by the
assessee with any other
person
Any business transacted Only transactions between distinct entities
which are closely connected are covered.
(v) 10AA, 80-IAB, 80-IB, 80-IC
80-ID, 80-IE
Any business transacted Internal transfers as well as with third parties
covered
Note; -
80A [reference only to sub-section (6)]-Deductions made under chapter VIA while computing total
income
80-IA – Infrastructure development, etc
80-IAB – SEZ development
80-IB – Industrial undertakings
80-IC – Industrial undertakings or enterprises in special category states
80-ID – Hotels and convention centers in specified area
80-IE – Undertakings in North-Eastern states
80JJA – Collection and processing of bio-degradable waste
80JJAA – Employment of new workmen
80LA – Offshore Banking units and International Financial Services Centre
80P – Co-operative societies

4. ALL taxpayers to whom the provisions of Transfer Pricing apply i.e. Assessees transactions/specified domestic transactions
shall maintain all the documents required to be maintained under the provisions of chapter X of Income Tax Act,1961 and
file Form 3CEB certified by a chartered accountant. The due date for filing form 3CEB is 30th
November of the relevant
assessment year.
Conclusion
Inclusion of SDT within the purview of Transfer Pricing Regulations is a step towards expanding its scope. The domestic transfer pricing regulations
are applicable from assessment year 2013-2014. All of the compliance requirements relating to transfer pricing documentation, accountant’s report, etc.
shall equally apply to SDT as they do for international transactions amongst associated enterprises.

5. About Transfer Pricing:
In the globalised environment where business houses are getting smart the tax authorities are getting smarter with Indian transfer pricing regime getting closer
to global best practices day by day by importing the concepts like BEPS (Base Erosion and profit shifting), thin capitalisation and secondary adjustments either
taking birth or getting adopted. With the newer ways of doing business in global space it is essential that all the business strategies are aligned to proper and
planned taxation policy.
With ever increasing cross border transactions, it is essential that the Transfer pricing policies and solutions are tailored made to needs, uncomplicated,
innovative, effective, forward-thinking, complaint and practical to implement.
We at taxpert professionals have dedicated team for handling the International Transaction Advisory services. We have handled most complicated cases in the
most seamless manner. We have perfect blend of professionals which provide the spectrum of services in the area customised to the needs of our clients. We
have lot of esteemed business houses, NRI, HNI as our clients. We always strive for the best for our clients.
About Taxpert Professionals:
Taxpert Professionals is a conglomeration of multi-diverged professionals known for providing concentrated services in relation to taxation and corporate
laws in a seamless manner. Taxpert professionals believe in the creation of value through advising and assisting the business. At Taxpert the pool of
professionals from different spectrum like tax, accountancy, legal, costing, management facilitate the conversion of knowledge into beneficial transaction.
About CA. Sudha G. Bhushan :
Sudha is qualified Chartered Accountant and a Company Secretary with more than a decade of experience in the Foreign Exchange
Management Act, RBI, Transfer pricing and International taxation matters. She is a noted speaker and author.
Her articles are regularly published in the Journals of several institutes and at various other forums and has authored the following
books:
Practical aspects of FDI in India published by Institute of Company secretaries of India
Due Diligence under Foreign Exchange Management Act, 1999 published by CCH.
Comprehensive Guide to Foreign Exchange Management in two volumes published by CCH.
Practical Guide to Foreign Exchange Management published by CCH, a Walter Kluwers company.
Handbook on FEMA, Publication of Institute of Chartered Accountants of India
A scholar throughout her life she has been awarded many awards and recognitions including “Women Empowerment through CA Profession” by Northern
India Regional Council (NIRC) of Institute of Chartered Accountants of India (ICAI). Backed by experience in International firms she has extensive experience
of handling international transactions. She advises corporate as well as government authorities in lot of intricate transactions. Rendering tax and regulatory
advisory services, she has overseen and played a crucial role in the execution of complex international transactions involving issues revolving around tax,
repatriation, minimization of tax exposure, Foreign Investment (Inbound and outbound) etc.
She is on the Board of many esteemed listed companies as Independent director. She is member of Committee of International Taxation of WIRC, ICAI,
Member of Editorial Committee of WIRC of ICAI and Committee of women empowerment of ICAI.
She can be contacted at sudha@taxpertpro.com || 09769033172