Introduction

The buzz of globalisation and liberalisation has engulfed nations worldwide. Companies have moved beyond local markets. Countries are no longer isolated economies. Our world, as we know, is witnessing an increasing trend towards globalisation. For businesses, this has translated into prosperity and new markets, but lurking in this opportunity is the complexity of cross-border transactions. It is a simple premise: no two economies are similar. The taxes are different and so are the laws and regulations. It is in this scenario that the role of transfer pricing has gained both importance and credence. With the unprecedented increase in cross-border transactions between various arms of global enterprises, a host of complicated tax issues have emerged. One such key issue, transfer pricing, has gained enormous attention from both the business community and tax authorities across the world.

A multinational corporation operates in different countries across the globe with its facilities expanding offshore. It is a common phenomenon for such a corporation to have production centres located in different countries, thereby allowing the transfer of stock and services from one country to another. With changes in global businesses and tax environment in different geographies, one may encounter a thicket of transfer pricing issues and challenges on the way. It is in this context that the transfer pricing laws prescribe robust mechanisms for dealing with disagreements on transfer pricing matters that may arise in the course of global business operations. With this background, this chapter discusses in detail the transfer pricing dispute resolution mechanisms and transfer pricing audit experience in India. The chapter also provides a brief glance at the significant recent developments in the Indian transfer pricing landscape.