Eco Survey suggests synergy between I-T & customs on related-party imports
Jan 29, 2026
Experts welcomed the recommendation, saying it could lower transaction costs and litigation, making India more competitive against peer economies
The Economic Survey 2025–26 has recommended closer coordination between income tax and customs authorities in the valuation of related-party imports to reduce compliance burdens, minimise disputes and enhance India’s attractiveness as a global manufacturing hub.
In its chapter on the external sector, Playing the Long Game, the Survey highlighted a key friction point for companies operating in global value chains (GVCs): the parallel scrutiny of related-party import transactions by income tax and customs departments.
While transfer pricing rules under income tax law are designed to prevent over-invoicing of imports to shift profits abroad, customs valuation focuses on under-invoicing to evade duties. Both frameworks are anchored in the internationally accepted ‘arm’s length’ principle and are aligned with standards of the Organisation for Economic Co-operation and Development (OECD) and the World Customs Organization.
However, the Survey pointed out that identical import transactions are often examined independently by the two authorities, leading to duplication of compliance, higher transaction costs and the risk of inconsistent outcomes for businesses.
“Given the conceptual similarities in valuation methods under the two regimes, there is a clear opportunity to move towards a collaborative convergence approach,” the Survey said.
It advocated a structured framework with aligned methodologies, converged documentation requirements and coordinated administrative reviews. Such an approach, it argued, would provide greater certainty and predictability for businesses while safeguarding revenue interests.
“Such convergence would reduce compliance burden, minimise disputes, enhance transparency in cross-border trade, and improve ease of doing business, thereby strengthening India’s attractiveness as a global manufacturing and investment destination,” the Survey noted.
Experts welcomed the recommendation, saying it could lower transaction costs and litigation, making India more competitive against peer economies.
“By aligning methodologies, enabling converged documentation and introducing coordinated interaction between income tax and customs authorities, there could be significant reductions in compliance costs for industry, fewer disputes and greater certainty for businesses, while safeguarding revenue and enhancing India’s attractiveness as a global manufacturing and investment destination,” said Suresh Nair, partner at EY.
[The Business Standard]
