On 19 October 2020, India’s Central Board of Direct Taxes has released the Notification No. 83/2020 setting the arm’s length pricing variation limit for assessment year 2020-21. Accordingly, the variation between the arm’s length price determined under section 92C of the said Act and the price at which the international transaction or specified domestic transaction has actually been undertaken does not exceed 1% and 3% for other international and domestic inter-company transactions.
The notification clarifies the “wholesale trading” that means an international transaction or specified domestic transaction of trading in goods, which fulfils the following conditions, namely: – (i) purchase cost of finished goods is eighty per cent. or more of the total cost pertaining to such trading activities; and (ii) (ii) average monthly closing inventory of such goods is ten per cent. or less of sales pertaining to such trading activities.
