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Follow on Google News | India Notifies Final International Safe Harbour Rules on Transfer PricingOn September 18, 2013 Central Board of Direct Taxes (CBDT) of Government of India published the final Safe Harbor Rules (SHRs), says Nair & Co.'s Global Transfer Pricing services team.
By: Nair & Co. Section 92CB of the Income-tax Act provides for framing of safe harbour rules. The determination of arm's length price under sections 92C or 92CA of the Act is subject to these safe harbour rules. Section 92CB terms Safe Harbour Rules as the “circumstances in which the Income-tax Authority shall accept the transfer price declared by the assessee”. The advantages of Safe Harbour Rules will simplify the administration process of the tax department, offer ease from stressful documentation and allow taxpayers transfer pricing certainty, says Nair & Co.'s Global Transfer Pricing (http://www.nair- The significant aspects included in the final SHRs are: 5 years Validity: * SHRs are now relevant for 5 assessment years commencing from assessment year 2013-2014 (financial year 2012-13). * An assessee is allowed to select their own SHRs period; however it should not be more than 5 assessment years. * An assessee can implement this option by filing the prescribed Form as prescribed in the rules. Information Technology Enabled Services (ITES) & Information Technology Services (ITS) activities: * The primary threshold of Rs 100 crores related to transactions has been withdrawn. * Safe harbor margin set for transactions are as follow: * 20% margin if the transaction is up to Rs 500 crores. * 22% margin if the transaction is more than 500 crores. Corporate Guarantee: * The threshold of Rs 100 crores has been withdrawn subject to certain conditions. Knowledge Process Outsourcing (KPO): * The definition of KPO services has been amended, in order to distinguish from routine Business Process Outsourcing (BPO) activity. * Safe Harbour operating margin is 25% (reduced from the previously proposed 30%). * The maximum limit related to transactions has been withdrawn. For details about the draft Safe Harbour Rules, please read our previous release (http://www.nair- For more information about doing business overseas (http://www.nair- Subscribe (http://www.nair- International Business Guide (IBG) (http://www.nair- Get the latest news releases and updates on international tax, HR, Finance, compliance and other legal news at Nair & Co. Industry Alerts (http://www.nair- About Nair & Co. Nair & Co. provides you with your one touch outsourced finance, HR, legal and global tax compliance department for your international operations. If you are expanding abroad for the first time or increasing your global footprint, our turnkey solutions help you do so with minimal risk, stress and cost. We support 1000+ client operations in over 56 countries and have core offices in U.K., India, China, U.S., Japan and Singapore. Nair & Co. was named among the top 100 outsourcing services providers in the world by the International Association of Outsourcing Professionals (IAOP). Learn more at www.nair-co.com Read more on:international businesses services (http://www.nair- End
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