look news india
New Delhi, 29 October (Hindustan Reporter). The Central Board of Direct Taxes (CBDT), which regulates the Income Tax Department, has revised the 'tolerance' for the difference between 'arm's length' price and transfer pricing during international and specified domestic transactions for assessment year 2024-25. The scope has been notified.
The Finance Ministry said in a statement issued on Tuesday that the CBDT has notified the tolerance limit for assessment year 2024-25 in a notification issued on October 18. Notification of tolerance limits will provide certainty to taxpayers and reduce the perception of risk associated with transaction pricing in transfer pricing.
According to the notification issued by CBDT, the tolerance range has been kept at one percent for 'wholesale business' and three percent for all other taxpayers like last year. According to the CBDT, 'wholesale trading' will be defined as an international transaction in trade in goods or specified domestic transaction subject to certain conditions.
It is noteworthy that transfer pricing under tax laws refers to the pricing of goods and services exchanged between related companies. At the same time, arm's length price refers to the price which is equally applicable in transactions between entities other than related parties.