1P. Ragu Balan, 2Dr. E. Prema


The levy and collection of taxes is a not new concept for India. This system of tax collection is available from the ancient period. There are so many evidences to prove tax collection mechanism in India. Taxpayer always finds loopholes in the payment of taxes. Now days, Taxpayer are recruited tax experts to get advice, and escape from tax liability. This taxpayer activity leads to legal evasion. Tax payers have been using various holes already existing in domestic as well as international law to evade tax liability. Transfer pricing means, the price which is fixed at the time of transaction. Usually, transfer pricing is applied at the time of international or cross-border transactions. This transaction has been done among the multinational enterprise with associated enterprises. The actual loopholes are found as, commercialization issues on fixation of price or valuation of intangibles. The act of commercialization can be done after the valuation of intangibles. So, valuation of intangibles played a vital role in commercialization. Every goods or services have some value. Such value can be assessed with help of expenses incurred at the time of manufacturing, processing, inventing, creating etc., Intangible property shall be valued and final price fixed with common procedure. But, every intangible property is unique and cannot fix the common procedure in valuation. The act of valuation may fix the final price for intangibles. Organization for Economic Co-operation and Development (OECD) has clearly declared the traditional methods not useful, and recommended to apply the hard-to-value- intangible approach. Such an approach is not suitable for levy, and collection of tax on intangibles. India is not ready to apply the above-mentioned approach. Due to that, taxpayer may utilize this gap, and escape from tax liability. Researcher has put a spark on gun powder to remove the darkness in levy, and collection of tax on intangibles and remove barriers on reasonable commercialization. This loophole is phased by appropriate suggestions given by research. Government and tax authorities shall apply best methods in valuation of intangibles, and eclipse legal evasion of tax on intangibles.

Keyword : commercialization, Intangibles, Legal evasion, Taxes, Valuation, Manufacturing.

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May 25, 2024
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