The Central Board of Direct Taxes (CBDT) in India has issued Instruction No. 3 of 2016 on 10 March 2016, with immediate effect as new guidance to provide guidance to Assessing Officers (AOs) in selecting cases for transfer pricing (TP) audits in relation to international transactions and specified domestic transactions (SDTs).
The New Guidance requires that all cases selected for scrutiny on the basis of TP risk parameters with respect to international transactions and specified domestic transactions, either under the CASS (Computer Assisted Scrutiny Selection) system or under compulsory manual selection system, should be referred to the TPO by the AO after obtaining necessary approval from the Commissioner. Further, The New Guidance also clarifies that the primary responsibility for undertaking TP audits is that of specialized Transfer Pricing Officers.
