Prabhakar K S*
Finance Act, 2017 inserted a new Section 92CE in the Income-tax Act, 1961 with effect from 1st day of April, 2018 to provide for secondary adjustment by attributing income to the excess money lying in the hands of the associated enterprise.
The said provision shall be applicable to primary adjustments exceeding one crore rupees made in respect of the assessment year 2017-18 and on wards.
The Central Government vide Notification dated 15th June, 2017 prescribes the time limit for repatriation of excess money.
I.e. ON OR BEFORE 90 DAYS:
2. From the date of the order of Assessing Officer or the appellate authority, as the case may be, if the primary adjustments to transfer price as determined in the aforesaid order has been accepted by the assessee; OR
3. From the due date of filing of return, In the case of agreement for advance pricing entered into by the assessee; OR
4. From the due date of filing of return, In the case of option exercised by the assessee as per the safe harbor rules ; OR
5. From the due date of filing of return, In the case of an agreement made under the mutual agreement procedure (MPA) under a Double Taxation Avoidance Agreement (DTAA).
Computation of Interest – If not repatriated or failure
The imputed p.a. interest income, shall be computed,—
2. At 6 month LIBOR as on 30th September of the relevant previous year plus 300 basis points in the cases where the international transaction is denominated in foreign currency.
The author is a budding Tax Law Professional and may be reached at ‘shreetaxchambers @ bsnl.in’.
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