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Changes brought in Transfer Pricing through Union Budget-2022

Union Budget 2022 was announced on February 1st,2022 and many changes were brought in Taxation. One of the key areas to be focused was litigations. With respect to Transfer Pricing, budget has brought many changes. In this article, you can find the changes brought in Transfer Pricing through Union Budget 2022. 

Proposed Changes: 

  1. Deferment of Faceless assessment/appeal process: 
  • Section 92CA of Income tax act, 1962 which speaks about the powers of Transfer Pricing officer to refer to the computation of arm’s length price to an international transaction computed as per Section 92C.  
  • Whereas the provisions for notifying faceless assessment schemes under section 92CA were introduced in the act through Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 which states that the Central Government will issue directions by 31st March 2022. This date has been extended to 31st March 2024 through the Union Budget 2022. 
  1. Enhancement of powers as per Section 263: 
  • Section 263 lays down the provisions for revisionary powers of Assessing Officer with respect to orders issued by him, which are prejudicial to the interest of Revenue authorities. 
  • The existing provisions did not provide any revisionary powers with respect to orders issued by Transfer Pricing Officer (TPO). 
  • Union Budget 2022 has enhanced the revisionary powers to TPO, which includes the right to modify or cancel the TPO’s order. 

  1. Reduction in filing of repetitive appeal: 
  • Litigation management policy was announced through Union Budget 2022 which will be implemented by Government “to avoid filing repetitive appeals”. 
  • This means if the question of law in the case of an assessee is identical to a question of law which is pending in assessee’s previous appeals or some other’s case before the Jurisdictional High court or the Supreme court, then the filing of that appeal will be deferred till such question of law is decided by the Jurisdictional High Court or Supreme Court. 
  • It should be noted that this proposal is applicable only for Revenue department at High court or Supreme court level but not for appeals before CIT-A or the Tribunal. 
  1. Updated Return: 
  • Union Budget 2022 has given an option to file Updated income tax return within 24 months from the end of the relevant assessment period. This option can be availed even if the original return is not filed. 
  • This option is available for assessees who earn income through Transfer Pricing transactions. 
  • Also, there are some exceptions proposed where Updated Tax return cannot be filed like increase in losses, decrease in tax, resulting refund etc. 

Disclaimer: “Information contained herein is for informational purposes only and should not be used in deciding any particular case. The entire contents of this document have been prepared on the basis of relevant provisions and as per the information existing at the time of the preparation. Though utmost efforts have been made to provide authentic information, it is suggested that to have better understanding and obtaining professional advice after thorough examination of particular situation.”

prepared by
Kalivarapu Sai Srikar – Article Assistant

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