27 firms under taxman’s lens over transfer pricing: Chidambaram

Finance minister P Chidambaram told parliament on Friday that 27 companies, including the Indian arms of HSBC, Standard Chartered and Vodafone, underpaid taxes in the last fiscal year as they sold shares to their overseas arms too cheaply.

Chidambaram named the companies in a written reply in the Lok Sabha to a question about companies in conflict with the tax department over transfer pricing issues.

Transfer pricing, or the value at which companies trade products, services, shares or assets between units across borders, is a regular part of doing business for a multinational company and influences tax liabilities.

The issue has been high on the political agenda in India and the country has stepped-up enforcement of tax collections and actions against global companies.

The income tax department also made "transfer pricing adjustments" involving the Indian unit of Royal Dutch Shell, the finance minister said.

Shell filed a petition in the Bombay High Court on Wednesday challenging the claims by the tax authorities that a share sale to its overseas parent in 2009 was undervalued by about Rs15,200 crore.

British-based mobile phone giant Vodafone said in February it had received a fresh transfer pricing order in India over the issue of shares by a unit, adding to its tax woes in the country. It has said it would challenge the order.

India's top mobile operator Bharti Airtel and some units of the diversified Essar conglomerate, including Essar Power and Essar Investments, were also named by the minister in his statement.