Quick Summary
The Ministry of Finance, Department of Revenue, has issued Notification No. S.O. 5053(E) dated November 6, 2025, specifying the tolerance range for determining the arm's length price (ALP) under Section 92C of the Income-tax Act, 1961, for the Assessment Year 2025-26. As per the notification, the Central Government has set the following permissible variations between the ALP and the actual transaction price for international or specified domestic transactions: 1% in the case of wholesale t
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3499
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4999
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FAQ :
For wholesale trading, the arm's length price tolerance is 1% for AY 2025-26.
For all other international or specified domestic transactions, the arm's length price tolerance is 3% for AY 2025-26.
The actual transaction price will be deemed the arm's length price if the variation remains within the specified 1% or 3% limits.
Wholesale trading is defined as transactions where the purchase cost of finished goods is 80% or more of the total trading cost, and the average monthly closing inventory is 10% or less of sales.
No, the CBDT has stated that the retrospective application of this notification will not adversely affect any taxpayer.
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