Transfer Pricing - Definition / Legal Terminology - Income Tax

What is Transfer Pricing- Transfer pricing is concept traditionally began with the amount charged by one segment of an enterprise for a product or service that it supplied to another segment of the same enterprise. Thus, transfer pricing means the price charged between two or more of a associated enterprises (as explained in section 92A) operating in different countries. The provisions under sections 92 to 92F have been enacted with a view to provide a statutory framework which can lead to computation of reasonable, fair and equitable profit and tax in India so that the profits chargeable to tax in India do not get diverted elsewhere by altering the prices charged and paid in intro-group transactions leading to erosion of Indian tax revenue. Any income arising from an international transaction shall be computed having regard to arm s length price.