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Arm’s Length Price of International Transaction or Specified Domestic Transaction

Notification No. 46/2023/F. No. 500/1/2014-APA-II

Notification Date: 26th June, 2023

Applicable Date: w.e.f. 1st April 2023

Relevant Act / Rule: Income Tax 1961

Relevant Section / Rule: Section 92C(2) read with proviso to sub-rule (7) of Rule 10CA

Relevant Assessment Year: AY 2023 – 24

It has been notified that price at which International Transaction or Specified Domestic Transaction has been actually undertaken shall be considered as Arm’s Length Price for Section 92C if the variance between both the prices does not exceed as notified under following scenarios –

    1. In case of Wholesale Trading – Variance does not exceed 1% of actual price of the transaction.
    2. In all other Cases – Variance does not exceed 3% of the actual price of the transaction.

Wholesale Trading means an International Transaction or Specified Domestic Transaction of trading in goods, which fulfils the following conditions:

    1. Purchase cost of finished goods is 80% or more of the Total Cost pertaining to such trading activities; and
    2. Average Monthly Closing Inventory of such goods is 10% or less of Sales pertaining to such trading activities.

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