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The Central Government notifies the tolerance range for price variations under the Income-tax Act, 1961 for assessment year 2023-2024. The variation limit is one percent for wholesale trading. The limit is three percent in all other cases. The undertaken price is deemed to be the arm's length price when the variation does not exceed these limits. Wholesale trading requires a finished goods purchase cost of eighty percent or more of the total cost and an average monthly closing inventory of ten percent or less of sales.
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MINISTRY OF FINANCE (Department of Revenue) NOTIFICATION New Delhi, the 26th June, 2023 INCOME-TAX
S.O. 2777(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)(hereafter referred to as the said Act) 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 of the said Act and the price at which the international transaction or specified domestic transaction has actually been undertaken does not exceed one per cent. of the latter in respect of wholesale trading and three per cent. 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 2023-2024.
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:-
[Notification No. 46/2023/F. No. 500/1/2014-APA-II]
Dr. VIJIT PATEL, Under Secy.
Explanatory Memorandum
The notification provides for tolerance range of one per cent. for wholesale trading and three per cent. in all other cases for assessment year 2023-2024. It is certified that none will be adversely affected by the retrospective effect being given to the notification.
