You’ll use the CUP approach to compare the price and terms of a controlled transaction between linked firms with the price and terms of a comparable uncontrolled transaction between independent enterprises you’ve found.
Transfer Pricing is a popular term in every company for the purpose of complying with the Income Tax Act of India. In this article the two types of Transfer Pricing adjustments, primary adjustment and Secondary adjustment, will be discussed briefly.
The Profit Split Method is one of the key methods used in transfer pricing which is typically used when both or all enterprises involved in the transaction have made a significant contribution towards the supply of either goods or provision of services.This popular method begins with identifying the profits sharing ratio between the associated enterprises relative to the contribution that each enterprise has made to the transaction.
Transfer pricing can be defined as the value which is attached to the goods or services transferred between related parties. While using this method, one takes the prices at which the associated enterprise sells its product to the third party. This price is referred to as the resale price.
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