The Hindu Business Line : ‘Exclude PSBs from purview of transfer pricing provisions’

New Delhi, Feb. 12 Public sector banks (PSBs) have urged the Finance Minister, Mr P. Chidambaram, to exclude them from the ambit of transfer pricing provisions under the income tax law.

They have also sought exclusion from the purview of Section 40A(2) of the income tax law, which empowers an assessing officer to disallow deduction of any expenditure incurred between related parties and considered by the officer as excessive or unreasonable having regard to the fair market value of the goods, services or facilities.

Banking industry sources said that chief executives of PSBs had at their meeting with the Finance Minister here on Tuesday pointed out that many of their financial assistance transactions with corporates and non-corporate clients get covered within the scope of these provisions.

“At times, banks have to give assistance at fluctuating rates compared to market rates depending on the risk factors and type of industry like infrastructure. As the pricing is based on various norms outlined by banks that are in turn regulated by the Reserve Bank of India, it is necessary that banks are excluded from the purview of sections 40A(2), sections 92 to 92F (transfer pricing provisions),” sources said.

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