Know about International Transaction

Hello Connections,

Let’s discuss the meaning of International Transaction before going in depth of Transfer Pricing.

What is International Transaction?

As per Section 92B of income tax act 1961 , an international transaction means

• Transaction between two or more associate enterprises
• Either or both of whom are non-residents.

In simple words, when any transaction between two or more associate enterprises and at least one of them is non resident then such transaction is termed as international transaction. If both of them are non resident then transfer pricing provisions shall apply only if the income of at least one non resident is taxable under income tax act 1961.

What is Deemed International Transaction?

As per Section 92B of income tax act 1961, any transaction between an enterprises and unrelated person shall be deemed to be an international transaction if-

• There exists a prior agreement between associate enterprises of such enterprises and unrelated person or;
• Terms of transaction determined by associate enterprises of such enterprises and;
• Such enterprises or associate enterprises are non resident.

“ Transaction means sales, purchases, or leasing tangible or intangible property, providing services, or lending or borrowing money or any transaction having impact on profit, income, losses, assets. ”

Happy Reading !