Income-tax Rule 84 — Transfer pricing information and documentation

Information and documents to be kept and maintained under section 171(1). 84. (1) Every person who has entered into an international transaction or a specified domestic transaction shall keep and maintain, among other things: a description of the ownership structure of the assessee enterprise; a profile of the multinational group of which it is a part; a description of the business of the assessee and the associated enterprises and the industry in which they operate; the nature and terms (including prices) of each transaction and the quantum and value involved; a description of functions performed, risks assumed and assets employed by the parties; a record of economic and market analyses, forecasts, budgets and financial estimates bearing on the transaction; a record of uncontrolled transactions considered for comparability; a record of the comparability analysis performed; a description of the methods considered and the most appropriate method selected, with reasons and application details; a record of the actual working for determining the arm's length price, including comparable data and adjustments made; the assumptions, policies and price negotiations that critically affected the pricing; details of adjustments made to align transfer prices with arm's length prices and the consequent adjustment to total income; and any other relevant information, data or document. (2) Sub-rule (1) shall not apply to an international transaction where the aggregate value, as recorded in the books of account, of international transactions entered into by the assessee during the tax year does not exceed one crore rupees. (3) For sub-rule (2) to apply, the assessee must substantiate, on the basis of material available, that income from such international transactions has been computed in accordance with section 161. (4) Sub-rule (1) does not apply to an eligible specified domestic transaction under rule 96 for an eligible assessee under rule 95; instead, a reduced, specifically listed set of information and documents (ownership structure, business description, transaction terms and value, relevant regulatory records, actual pricing workings, critical assumptions/policies/negotiations, and other relevant information) must be kept and maintained, with the exact particulars differing slightly depending on whether the eligible assessee is the Government electricity company described in rule 95(a) or the cooperative society described in rule 95(b). (5) The information under sub-rules (1) and (4) must be supported by authentic documents, which may include: official government publications, reports and databases; market research studies and technical publications; price publications including stock exchange and commodity market quotations; published accounts and financial statements of the associated enterprises; agreements and contracts with associated or unrelated enterprises for similar transactions; correspondence documenting negotiated terms; and documents issued in connection with transactions under normal accounting practice. (6) The information and documents under sub-rules (1) to (4) should, as far as possible, be contemporaneous and exist on the specified date referred to in section 173(d). (7) Where a relevant transaction continues to have effect beyond one tax year, fresh documentation need not be maintained separately for each tax year unless there is a significant change in the nature or terms of the transaction, the underlying assumptions, or any other factor affecting the transfer price — in which case fresh documentation bringing out the impact on pricing must be maintained. (8) The information and documents under sub-rules (1) to (4) shall be kept and maintained for a period of nine years from the end of the relevant tax year.