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India Sets Arm's Length 'Tolerable Range' For 2019-20

by Mary Swire, Tax-News.com, Hong Kong

20 September 2019


India's Ministry of Finance has released a new Notification that sets the "tolerable range" for arm's length dealings.

The tolerable range is one percent for wholesale trading, and three percent in all other cases for the 2019-20 year of assessment.

"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 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.

The announcement was made in Notification No. 64 of 2019.

TAGS: Finance | India | transfer pricing | BEPS

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