As per the notification 45/2014 issued by the ministry of finance dated 23rd September 2014 the arm’s length price (determined under section 92 C of the Income Tax Act ) of an international transaction or a specefic domestic transaction will be same under the following situations for the assessment year 2014-15.
· In case of wholesale trading:
If the variation between arm’s length price and the price at which the international transaction or specified domestic transaction has actually been undertaken does not exceed one percent of the latter.
· In all other cases:
If the variation between arm’s length price and the price at which the international transaction or specified domestic transaction has actually been undertaken does not exceed three percent of the latter.
Explanation. For the purposes of this notification, “wholesale trading” 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 percent or more of the total cost pertaining to such trading activities; and
(ii) average monthly closing inventory of such goods is ten percent or less of sales pertaining to such trading activities.
Source :- CBDT Related Tags Incometax, Transfer Pricing
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