Transfer pricing- Transaction price to be treated as arm’s length price in certain situations.

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 

CA Ankit Gulgulia (Jain)

CA Ankit Gulgulia (Jain) is Fellow Member of ICAI, Certified IFRS & Business Valuation from ACCA UK and is Practising Chartered Accountant with 8 Years plus of Rich Experience in Audit, GST, Income Tax, DGFT, Valuation, Strategic Advisory, Matters of FEMA, FDI, NCLT, RERA, ROC, SEBI, RBI, M&A, Fundraising, Startups etc as Founder of AGA, Chartered Accountants. AGA Works in wholesome business solutions right from scratch of Company Incorporation to Compliances all under One Roof. He also takes interest in being Virtual Chief Financial Officer (CFO) for Small and Medium Enterprises for Guiding them with All Business, Tax & Strategic Business Decision Making . To Know More, Learn here or contact us at ankitgulgulia@gmail.com

CA Ankit Gulgulia (Jain)
About CA Ankit Gulgulia (Jain) 1116 Articles
CA Ankit Gulgulia (Jain) is Fellow Member of ICAI, Certified IFRS & Business Valuation from ACCA UK and is Practising Chartered Accountant with 8 Years plus of Rich Experience in Audit, GST, Income Tax, DGFT, Valuation, Strategic Advisory, Matters of FEMA, FDI, NCLT, RERA, ROC, SEBI, RBI, M&A, Fundraising, Startups etc as Founder of AGA, Chartered Accountants. AGA Works in wholesome business solutions right from scratch of Company Incorporation to Compliances all under One Roof. He also takes interest in being Virtual Chief Financial Officer (CFO) for Small and Medium Enterprises for Guiding them with All Business, Tax & Strategic Business Decision Making . To Know More, Learn here or contact us at ankitgulgulia@gmail.com

Be the first to comment

Leave a Reply

Your email address will not be published.


*