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CAG may review Transfer Pricing Cases

“Transfer pricing cases will now be subject to audit by the Comptroller and Auditor General (CAG) of India,” Director General of Income Tax (DGIT) R N Dash said while addressing a seminar organised by Assocham.

The Income Tax department today said that transfer pricing cases, which have revenue implications for the exchequer, will be scrutinised by the government auditor CAG.

Multinational corporations often use transfer pricing as a tool to shift cost of input from one country to another to avoid payment of taxes in nations with high incidence of taxes. India has been trying to tighten the transfer pricing regulations to prevent tax evasion.

The CAG so far has not been auditing transfer pricing cases, which involves huge amount of revenue and often lead to litigation between the companies and the tax authorities.

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