Imagine two companies X and Y that are related to each other. Whenever Y ships need repair, it will go to X and X doesn't charge an exorbitant fee. Such a business deal means that X is artificially suppressing profits in India. And if Britain has a lower tax rate than India, Y pays less tax overall too. It's a big win for Y.
The Indian Tax Authorities ‘surveyed’ BBC last week. They wanted a peek into some transactions they found suspicious. And one of the allegations apparently levelled against the British media house is that it flouted something called the ‘transfer pricing’ regulations. So in today’s episode for 22nd February 2023, we thought we’d explain a bit about this specific part of the tax world today.