Specified domestic transaction

This query is : Resolved

PANKAJ KUMAR SRIVASTAVA (Querist)
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09 August 2017 RESPECTED SIR,
FOR THE F.Y.2016-17 A.Y.2017-18 TRANSACTIONS COVERED U/S 40A 2 (b) WILL BE CONSIDERED OR NOT ?

PLEASE GUIDE ME

WITH REGARDS

sivaram

sivaram (Expert)
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09 August 2017 Yes it is considered for Specified Domestic Transaction Include all purchases and expenses only between your associated enterprise not not your sale to associated enterprises

PANKAJ KUMAR SRIVASTAVA

PANKAJ KUMAR SRIVASTAVA (Querist)
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09 August 2017 SIR,
FROM WHICH FINANCIAL YEAR IT IS DISCONTINUED ?

Aashok Kumar Sharma online

Aashok Kumar Sharma online

(Expert)
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25 July 2025 Regarding Specified Domestic Transactions (SDT) under section 40A(2)(b):

* Yes, transactions covered under section 40A(2)(b) **were considered as SDT** for transfer pricing purposes.

* However, **from the Financial Year 2016-17 (Assessment Year 2017-18) onwards**, transactions under section 40A(2)(b) **have been excluded** from the definition of Specified Domestic Transactions by amendment.

### Explanation:

* Earlier, certain payments disallowed under section 40A(2)(b) (like payments to related parties without proper consideration) were also included as SDTs for transfer pricing.
* But the Finance Act 2016 (effective from FY 2016-17) **excluded 40A(2)(b) transactions from SDT**.

### Summary:

| Financial Year | Inclusion of 40A(2)(b) transactions in SDT? |
| ----------------------- | ------------------------------------------- |
| Up to FY 2015-16 | Yes, included |
| From FY 2016-17 onwards | No, excluded |

If you need, I can share the exact amendment details or references. Would you like that?

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