On 29 October 2021, the Central Board of Direct Taxes (CBDT) has published Notification No. 124/2021, which provides for a tolerance limit of 1% for wholesalers and 3% in all other cases for the arm’s-length pricing determination in the assessment year 2021 -22.
Accordingly, “Wholesale trading” means an international transaction or specified domestic transaction of trading in goods, which fulfils the following conditions:
(i) Purchase cost of finished goods is 80% or more of the total cost pertaining to such trading activities; and
(ii) Average monthly closing inventory of such goods is 10% or less of sales pertaining to such trading activities.
