The Central Board of Direct Taxes (CBDT) has further extended the applicability of the provisions of IT Rules 10TD(1) and (2A) relating to Transfer Pricing (TP) Safe Harbour Rules up to assessment year (AY) 2023-24. Corresponding amendment in IT Rule 10TD(3B) has been notified through the Income-tax (15th Amendment) Rules, 2023, effective April 1, 2023.
The Safe Harbour Rules for Transfer Pricing were introduced by the Finance Act, 2009 to reduce the transfer pricing disputes, provide certainty to taxpayers, align safe harbour margins with industry standards, and expand the scope of safe harbour transactions. These rules were amended by the CBDT in 2017 through Notification 46/2017 to introduce a new safe harbour regime, and have been extended several times since then.
Under the rules, the Income-tax authorities must accept the transfer prices declared by the Assessee to be at arm’s length for the eligible international transactions specified in IT Rules 10TD(1), (2) and (2A).
The concept of safe harbour rates to monitor the arm’s length pricing of a company’s transactions with its overseas divisions/units was Initially notified for a block of four years under IT Rule 10TD(3) for AY 2013-14 to 2016-17, the transfer pricing safe harbour rates were then extended for three years under IT Rule 10TD(3A) for AY 2017-18 to 2019-20. Subsequently extension were made under IT Rule 10TD(3B) for AY 2020-21, 2021-22, 2022-23 and 202-24.
The current extension ensures that the transfer pricing safe harbour rates will remain in effect for AY 2023-24 as well. The amendment is deemed to have come into force on April 1, 2023.
It may be noted that the transfer pricing (TP) safe harbour rates that were initially notified for a block of four years under IT Rule 10TD(3) for AY 2013-14 to 2016-17, and then for three years under IT Rule 10TD(3A) for AY 2017-18 to 2019-20, were later extended up to AY 2020-21, AY 2021-22 and AY 2022-23. According to the current extension, these rates will remain in effect for AY 2023-24 as well.
CBDT Income Tax Notification 58/2023 dated 09/08/2023: IT Rule 10TD(3B) amended to extend applicability of Transfer Pricing (TP) Safe Harbour Rules upto assessment year 2023-24
CBDT Income Tax Notification 66/2022 dated 17/06/2022: IT Rule 10TD(3B) amended to extend applicability of Transfer Pricing (TP) Safe Harbour Rules upto assessment year 2022-23
CBDT Income Tax Notification 117/2021 dated 24/09/2021: IT Rule 10TD(3B) amended to extend applicability of Transfer Pricing (TP) Safe Harbour Rules upto assessment year 2021-22
CBDT Income Tax Notification 25/2020 dated 20/05/2020: CBDT amends Rules 10TD and 10TE to notify Safe Harbour Rules for AY 2020-21, vide Income Tax (9th Amendment) Rules 2020, to continue applicability of safe harbour rates of transfer pricing for AY 2020-21
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