According to Section 92E of the Income Tax Act of 1961, it is mentioned that whoever is connected with any international transaction or specified domestic transactions has to acquire a report from an accountant. So, read on to learn more about Section 92E of the Income Tax Act of 1961 and everything it includes.
See also: Section 269SS of Income Tax Act
Section 92E of the Income Tax Act: What is it?
Anyone carrying out any kind of domestic and international transaction in previous years will need to get a legal report from an accountant. Also, the person has to submit it within the stipulated time period in a specific format mentioned in the rule book. This document, which will contain all kinds of required data, has to be officially signed and verified by the accountant.
The accountant has to be a qualified chartered accountant (CA) who has a valid certificate for practising independently. The certificate should follow the Chartered Accountants Act of 1949. When you submit the form, you have to use the form 3CEB. The form will be associated with section 92E at least one month prior to the due date for ITRs. All CAs who are associated with the report creation have to verify their report. As a taxpayer, you have to provide a letter of invitation. It will help conduct an audit under section 92E. The letter of invitation should be signed by a person who will attest to the return of income.
Section 92E of the Income Tax Act: Relevance
A few specific local and international transactions fall under section 92E. The requirements of section 92E apply to all international transactions, which connect more than two firms. It also applied to a few domestic transactions. Here, we have mentioned a few transactions it is typically applied to.
- Buying or selling any kind of material property
- Agreement for division of costs and expenses
- Any transaction which will result in a loss or gain
- Agreement based transaction between an enterprise and a party
Section 92E of the Income Tax Act: International and domestic transactions covered under it
In case both parties are non-residents, the transaction between both parties will be considered an international transaction. You have to keep in mind that if it meets the following conditions, an agreement between two related firms and a company with a third party will be known as an international agreement.
- The other party and the affiliated authority have previously agreed with respect to the relevant transaction.
- No matter what, if the other party is non-resident, then the terms of the applicable transaction will be determined between both the party and the affiliated authority.
FAQs
What is Section 92E of the Income Tax Act?
Section 92E of the Income Tax Act requires anyone who has completed global transactions or certain domestic transactions in the previous year to receive a report from a chartered accountant and present it in the specified form by a specified date.
What is the penalty fee for late filing of the transfer pricing report?
The penalty fee is Rs 5 lakh in case of failure to furnish the transfer pricing report.
What is the upper limit of the transfer pricing in a single financial year?
The upper limit of the transfer pricing is Rs 20 crore for specific domestic transactions and Rs 1 crore for international transactions.
Who is covered under section 92E?
Whoever is engaged in international and specified domestic transactions needs to file under section 92E.
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