Transfer pricing - Computation of Arm's length price - Notified percentage under third proviso to section 92C - 86/2015 - Income Tax

GOVERNMENT OF INDIA MINISTRY OF FINANCE (Department of Revenue) NOTIFICATION NO. 86/2015 New Delhi, the 29 th October, 2015 S.O. (E) In exercise of the powers conferred by the third proviso to sub-section (2) of section 92C of the Income-tax Act, 1961 (43 of 1961) read with proviso to sub-rule (7) of rule 10CA of the Income-tax Rules, 1962, the Central Government hereby notifies that where the variation between the arm s length price determined under section 92C and the price of which the international transaction or specified domestic transaction has actually been undertaken does not exceed one percent of the latter in respect of wholesale trading and three percent of the latter in all other cases, the price at which the international transaction or specified domestic transaction has actually been undertaken shall be deemed to be the arm s length price for Assessment Year 2015-2016. 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 : - purchase cost of finished goods is eighty percent or more of the total cost pertaining to such trading activities; and average monthly closing inventory of such goods is ten percent or less of sales pertaining to such trading activities. [F. No. 500/1/2014-APA-II] (Anchal Khandelwal) Under Secretary to the Government of India