Applicability of Rules of Transfer Pricing on Specified Domestic Transactions

The Finance Act, 2012 has extended the applicability of provisions of transfer pricing to Specified Domestic Transactions also.

As per Sec.92BA “Specified Domestic Transaction “means:-

• Any expenditure in respect of which payment has been made or is to be made to a person referred to in clause (b) of Sec. 40A(2),
• Any transaction referred to in Sec.80A,
• Any transfer of goods or services referred to in Sub-Sec.(8) of Sec.80-IA,
• Any business transacted between the assessee and other person as referred to in sub-section (10) of Sec.80-IA,
• Any transaction, referred to in any other section under chapter VI-A or Section 10AA, to which provisions of sub-section (8) or sub-section (10) of section 80-IA are applicable,
• Any other transaction as may be prescribed,

All the transactions covered above will be regarded as Specified Domestic Transaction where the aggregate value of transactions exceeds a threshold limit of Rs.5 crore in a previous year.

Accordingly, as per the amendment made by Finance Act, 2012 all the provisions which were applicable on transfer pricing will also apply on Specified Domestic Transaction, such as Sec.92, Sec.92C, Sec.92CA, Sec.92D, Sec.92E, as well as the penalty provisions u/s 271 (1) (c), 271AA, 271BA, 271G.

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Shrawani Trivedi,

trivedishrawani9@gmail.com