An autonomous research institute under the Ministry of Finance


An Analysis of Transfer Pricing Disputes in India

Publication date

May, 2019


NIPFP Working Paper No. 266


Suranjali Tandon and Devendra Damle


The transfer pricing regime in India, since its inception, has been criticised for pronounced and protracted litigation. In this context, this paper evaluates the transfer pricing regime over the span of a decade (2003-04 to 2013-14) using 6731 case orders. It presents the first evidence of the duration of transfer pricing cases, delineated into pre-ITAT and post-ITAT phases, and compares the performance of the two pre-ITAT forums — the CIT(A) and the DRP. Further, the paper presents evidence on issues such as repeated litigation on identical grounds and remand orders that place companies in cycles of litigation. We find that while the DRP, as an alternative dispute resolution mechanism, may have led to a reduction in case duration in the initial years, this benefit may have now peaked leading to a convergence across forums. Further, we find that often grounds for litigation are similar across years, and therefore joint audits for multiple years may be a superior strategy for transfer pricing cases than the current one.
Keywords: Transfer pricing, Income Tax Appellate Tribunal, Dispute Resolution Panel
JEL Classification Codes: K34, K41, M41, M42


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