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The recently announced Indian Budget 2017 (the Budget) proposes significant amendments to the Indian transfer pricing law.  

The three key proposals relevant to the transfer pricing provisions are:

  1. Introduction of a secondary adjustment mechanism.

  2. Restriction on deduction of interest paid or payable to associated enterprises (AEs) to 30% of earnings before interest, depreciation, tax, and amortisation (EBIDTA).

  3. Exclusion of certain transactions from the ambit of domestic transfer pricing provisions.

The proposals will be formalised as a part of the Indian legislation upon assent of the President of India, either in the current form or with some modifications (PwC India is in active discussions with the Government of India in relation to these changes).

If you would like more information, Our Tax Insight provides further details - click here to access. 

You can also click here to find the PwC India webcast entitled “Second Avataar of TP in India: Forging ahead”, which discusses key issues arising from the proposed provisions.