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India Sets Up Tax Dispute Resolution Panels For Multinational Companies

by Mary Swire, Tax-News.com, Hong Kong

27 November 2009


The Indian Central Board of Direct Taxes has notified the rules of procedure for the Dispute Resolution Panels (DRP), constituted under section 144C of the Income Tax Act, 1961 as amended by the Finance Act 2009, and taking effect from November 20, 2009.

The DRPs will be established in eight cities in India: Delhi, Mumbai, Ahmedabad, Kolkata, Chennai, Hyderabad, Bengaluru and Pune.

Any foreign company, or any domestic company with transfer pricing issues, in whose case the income-tax assessing officer proposes to make any variation in the income or loss returned, may apply within a month of receiving the draft assessment order before the DRP for appropriate remedy by way of direction to the assessing officer.

The direction will be binding on the assessing officer but the taxpayer will be at liberty to appeal against the assessment order incorporating directions of the DRP before the Income Tax Appellate Tribunal (ITAT).

The Dispute Resolution Panel will be a collegium comprising of three Commissioners of Income Tax. The mechanism is expected to reduce taxpayer grievances and litigation.

This comprehensive report in our Intelligence Report series examines the global and national landscapes in which companies can use transfer pricing to improve their after-tax returns, including summaries of recent developments in design of the corporate supply train, the usefulness of 'offshore' in international corporate tax planning, and a section covering the spread of DTAAs and CFC laws. It is available in the Lowtax Library at http://www.lowtaxlibrary.com/asp/subs_reports.asp and a description of the report can be seen at http://www.lowtaxlibrary.com/asp/description_report16.asp

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