Secondary adjustments may take the form of "constructive dividends, constructive equity contributions, or constructive loans", said the memorandum to the Finance Bill 2017.
"It is also proposed to provide that such secondary adjustment shall not be carried out if the amount of primary adjustment made in the case of an assessee in any previous year does not exceed Rs 1 crore and the primary adjustment is made in respect of an assessment year commencing on or before April 1, 2016," the memorandum stated.
The minister has proposed to insert a new Section 92CE in the Income Tax Act to give effect to the secondary adjustment norms, which is based on OECD's transfer pricing guidelines for multinational enterprises and tax administrations.
It is also provided that where the excess money available with the associated enterprise on primary adjustment is not repatriated to India within the prescribed time, it shall be deemed to be an advance made by the assessee to such associated enterprise.
The interest on such advance shall be computed as the income of the assessee, it said.
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