India: Customs valuation for transfer pricing purposes | KPMG | GLOBAL
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India: APA authorities accept customs valuation for transfer pricing purposes

India: Customs valuation for transfer pricing purposes

The Indian advance pricing agreement (APA) authorities concluded an APA wherein the price determined by the Special Valuation Branch of the Indian Customs authorities was accepted as the arm’s length price for certain imports.


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Traditionally, transfer pricing and customs valuation functions seek to evaluate an inter-company transaction from different (opposite) perspectives. Both aim to arrive at an arm's length price. Transfer pricing authorities seek to prevent any excessive price for imports. However, customs authorities seek to prevent any under-pricing for imports. The two methods differ, and taxpayers often find it difficult to adopt an approach that demonstrates their inter-company pricing to be at arm's length from both transfer pricing and customs valuation perspectives.

In a recent case, the authorities adopted in an APA the customs valuation for transfer pricing purposes. 

KPMG observation

Tax professionals look to this case as positive reinforcement of the potential value of APAs in India.


Read a March 2018 report [PDF 642 KB] prepared by the KPMG member firm in India

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