Transfer Pricing compliances timelines
TRANFER PRICING COMPLIANCES
As the individual tax return filing season has gone by, the next upcoming one would be for corporates. In case of companies not subject to transfer pricing provisions, the IT return due date would be 30 September and for tax payers with TP applicability the IT return timeline is 30 November and consequently the transfer pricing compliances in terms of TP documentation and Form no. 3CEB would be 31 October 2022 (1 month prior to IT return filing).
Why this assumes prominence is, right from the year when these TP compliance timelines were advanced by 1 month to the filing of the IT return , the tax payers had the leverage of extension of timelines because of COVID by few months. So perhaps this would be the first time the tax payers would be working to complete these TP compliances in October. Considering that there was no extension of the individual return deadline, possibility of extension may be remote.
There are instances where some of the tax payers file the Form 3CEB but delay the preparation of the detailed TP document though they would have some working files for defense. When the cases are picked up for TP scrutiny, there is a rush for completion of the same as per the procedure mandated under the Income Tax Act/ rules.
As one would be aware that the timelines for completion of the assessment proceedings before the TPO and consequently the AO has been shortened. We have noticed that the tax department has issued a flurry of notices to taxpayers calling for the TP document amongst other details for FY 2020-21 now though the timeline for completion of the same is December 2023. The cases referred for TP scrutiny has shown an upward trend from FY 2019-20 onwards. One of the reasons being that during FY 2018-19, there were very few cases picked for TP scrutiny as there was revision in timelines and revenue missed the bus for referring the cases to TPO.
On account of the shrinkage of the assessment timelines, it is all the more required by all taxpayers to complete the maintenance of the detailed documentation by 31 October 2022 without delaying the same. This would make the company more prepared to face the scrutiny and can also stand the test on contemporaneous data points.
Provided below is a summary of the timelines on TP compliances for FY 2021-22
- Preparation and maintenance of TP documentation – 31 October 2022
- Issuance of Form No. 3CEB – 31 October 2022
- Filing of Masterfile notification (Form 3CEAB) – 31 October 2022
- Filing of Masterfile (Form 3CEAA) – 30 November 2022
- Filing of CbC notification (Form 3CEAC) – 31 October 2022 (if parent entity year ending is 31 December)
- Filing of CbC report (Form 3CEAD) – Indian HQ/alternative reporting entity in India- 31 March 2023