Tax Liability Issues of Transfer Pricing in International Transactions with specific reference to the Partial Intellectual Property

Abstract

The Government acts as the parent and protects its people like children. Initially, Government was entrusted with the duty of protector but now the government functions for the development of people and to increase the standard of living. Government is a welfare state and utilizes all money for the development of its people. The government may accumulate revenue through different methods such as fees collected for government, direct tax, indirect taxes, providing license for business or individual performance, fines collected for the violation of traffic rules, etc., and collected revenues spent for people. The tax is one of the major sources of revenue collected based on income and consumption. Intellectual property is the property created by human intellectual, skill and intellectual labour, etc., The present research plans to drive the study towards how partial intellectual property escapes from tax liability. Generally, these transactions are done between two custom frontiers of different territories. As per Income Tax Act-1961, these transactions are covered under the name of transfer pricing. But, it covered tangible property, services, and financial transactions. Income tax provisions and methods are not useful for levy tax on the transfer of partial intellectual property and other intellectual property. Multinational companies have appointed technical experts to exclude tax liability by invoking tax loopholes. There are various methods used to evade the tax liability of the above- mentioned transactions. The research will identify the research gaps and fill those gaps with appropriate suggestions.