• Service: Tax, Global Transfer Pricing Services, Global Compliance Management Services, International Tax
  • Type: Regulatory update
  • Date: 7/12/2013

India - Additional documentation for transactions within “notified jurisdictional areas” 

July 12: India’s Central Board of Direct Taxes introduced Rule 21AC to the Income-tax Rules, setting forth the procedures and documentation requirements for claiming a deduction when a payment is made with respect to an international transaction with a party located in a “notified jurisdictional area.”

The Finance Act, 2011, introduced anti-avoidance measures with respect to transactions with persons in jurisdictions that do not effectively exchange information with India—i.e., “notified jurisdictional areas.”

The anti-avoidance measures limit deductions (including deprecation) with respect to payments for transactions with parties in notified jurisdictional areas, including:

  • Transactions identified as "an international transaction" and subject to the transfer pricing rules
  • Transactions with related parties
  • Transactions with any financial institution located in such areas

The taxpayer must maintain documentation—in addition to the transfer pricing documentation—relating to the transaction, and have this documentation ready for presentation and review if requested by the tax authorities.

Read a July 2013 report [PDF 198 KB] prepared by the KPMG member firm in India: CBDT prescribes the form and documentation requirement in respect of transactions with persons in jurisdictions notified for inadequate exchange of information

Contact a tax professional with KPMG's Global Transfer Pricing Services.

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