India maintains tolerance band for transfer pricing adjustments

International Tax Review is part of Legal Benchmarking Limited, 1-2 Paris Garden, London, SE1 8ND

Copyright © Legal Benchmarking Limited and its affiliated companies 2026

Accessibility | Terms of Use | Privacy Policy | Modern Slavery Statement

India maintains tolerance band for transfer pricing adjustments

India’s taxpayers have received welcome news from the Income Tax Department that the tolerance band for transfer pricing adjustments will remain at 5% for financial year 2011 to 2012.

india-map150.png

However, for financial year 2012 to 2013 the tolerance band will go down to 3%.

Taxpayers can be reassured though that transactions during the 2011 to 2012 year that vary from the arm’s-length price by up to 5% will not be subject to an adjustment.

Section 92 of the Income Tax Act 1961 states: “...the Central Government hereby notifies that where the variation between the arm's-length price determined under section 92C and the price at which the international transaction has actually been undertaken does not exceed 5% of the latter, the price at which the international transaction has actually been undertaken shall be deemed to be the arm's-length price for assessment year 2012-13.”

more across site & shared bottom lb ros

More from across our site

While it’s great that the OECD is alive to multinationals’ fears of being caught in a compliance trap, the ‘common understanding’ illustrates a worrying lack of readiness
Rising demand for specialist expertise has fuelled the growth in tax partner headcounts, Cain Dwyer found; in other news, Switzerland has been urged to reconsider pillar two
An OECD report on the taxation of the digital economy is expected by the end of 2026, according to the group of nations
Trophy assets are evolving from personal indulgences to structured investments, prompting family offices to prioritise tax efficiency, governance discipline, and cross-border compliance
As demand for complex, cross-border private client counsel spikes, Patrick McCormick sees opportunity in starting from scratch
As part of an exclusive global alliance, KPMG will become one of Anthropic’s ‘preferred consultants’ for private equity
In the second part of this series, the focus shifts to how taxpayers can manage ongoing risks across the lifecycle of cross-border structures
Jurisdictions have moved to ensure that multinationals are not punished for late GIR filings due to a lack of available filing portals or exchange relationships
HMRC’s push for unified tax adviser registration won’t prevent every instance of improper conduct, but it is good for taxpayers and the UK’s reputation
Elsewhere, the UAE’s tax office has issued an update on registration penalties and two firms have been busy making lateral hires
Gift this article