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Transfer Pricing Mark up in Software/BPO

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24 March 2008 A Compnay who is 100% subsidary of foreign company. The foreign company is engaged in business of online sale of goods. The Indian Company has been set up to maintain and design software and website and its related work. It is decided that out of five method the fifth method Margin to Markup i.e. certain percentage on total cost incurred by the company will be charged by it. This compnay is doing only work for it holding company. Could you please advice the safest percentage of mark up on total cost it should charge from holding company taking into consideration average weighted margin in similar type of company. If it could be supported with some data for our record then it will be good.
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Rajesh Kumar

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Rajesh Kumar (Expert)
19 March 2009 Take a gross margin of 20%, it is fair n reasonable.
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