What are the methods for determining arm’s length price?

The Income Tax Act prescribes five methods for determining the arm’s length price: Comparable Uncontrolled Price Method, Resale Price Method, Cost Plus Method, Profit Split Method, and Transactional Net Margin Method. The most appropriate method depends on the nature of the transaction, availability of reliable data, degree of comparability, etc. In case two or more methods can be applied, the arithmetic mean of all relevant methods should be considered. The CBDT has issued detailed rules on applying these methods.