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RULES AT A GLANCE
International Transaction Software development services other than contract R&D where the total value of international transaction < ~100 cr Circumstances (operating 20% or profit over more operating expenses) 20% or more 30% or more
n an effort to reduce transfer pricing (TP) litigation, Section 92CA was introduced by the Finance Act (No. 2), 2009, authorising the Central Board of Direct Taxes (CBDT) to formulate safe harbour rules. By way of the above amendment, CBDT was empowered to frame safe harbour rules. Safe harbour rules are basically a set of directives or guidance on activities or margins whereby the revenue authorities should accept the pricing of a controlled transaction declared by the taxpayer without demur.
IT enabled services other than contract R&D where the total transaction < ~100 cr IT enabled services being knowledge processes outsourcing services other than contract R&D where the total transaction < ~100 cr Specified contract R&D services wholly or partly relating to software development Contract R&D services wholly or partly relating to generic pharmaceutical drugs Manufacture and export of core auto components Manufacture and export of non-core auto components Advancing of intra-group loan < ~50 cr (interest to wholly owned subsidiary rate at) Advancing of intra-group loan > ~50 cr to wholly owned subsidiary Providing corporate guarantee < ~100 cr to wholly owned subsidiary
30% or more 29% or more 12% or more 8.5% or more SBI base rate + 1.5% SBI base rate + 3% Commission/ fee @ 2% or more p.a. on the amount guaranteed