A Notification dated October 18 was released notifying the tolerance range for AY 2024-25.
Central Board of Direct Taxes (CBDT)
The Central Board of Direct Taxes (CBDT) has issued notification of tolerance range saying it shall provide certainty to taxpayers and reduce the risk perception associated with pricing of a transaction in transfer pricing.
A Notification dated October 18 was released notifying the tolerance range for AY 2024-25.
The tolerance range for transfer pricing shall be 1 per cent for transactions in the nature of “wholesale trading” and 3 per cent for others, respectively, as notified last year.
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The term ‘wholesale trading’, will be defined as an international transaction or specified domestic transaction of trading in goods which fulfil all the conditions.
These conditions are that the purchase cost of finished goods is 80 per cent or more of the total cost pertaining to such trading activities; and average monthly closing inventory of goods is 10 per cent or less of sales pertaining to such trading activities.
Proviso to sub-rule(7) of rule 10CA sub-rule(7) provides that, “if the variation between the arm’s length price so determined at which the international transaction or specified domestic transaction has actually been undertaken does not exceed such percentage not exceeding three per cent of the latter, as may be notified by the Central Government in the Official Gazette in this behalf, the price at which the international transaction or specified domestic transaction has actually been undertaken shall be deemed to be the arm’s length price.”
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