The Finance Act, 2001 introduced the transfer pricing
legislation in India and also laid down detailed guidelines on the
computation of the arm's length price in respect of
international transactions carried on with associated enterprises
("AE"). The Finance Act, 2002 introduced
the role of Transfer Pricing Officers
("TPOs") to be appointed for verifying
the arm's length computation of the cases selected for
scrutiny.
The Finance Ministry has now issued the following administrative
guidelines specifying the criteria for selection of transactions
for scrutiny by Assessing Officers
("AOs") and the process of verification
by the TPOs:
- A floor level of Rs. 5 crore has been set for picking up
international transactions for transfer pricing scrutiny;
