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MINISTRY OF FINANCE (Department of Revenue) Notification No. 124/2021- Income Tax New Delhi, the 29th October, 2021 S.O. 4586(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 196 1)(hereafter referred to as
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FAQ :
The notification sets tolerance ranges for the arm's length price (ALP) in international and specified domestic transactions for the Assessment Year 2021-2022.
For wholesale trading, the variation between the determined arm's length price and the actual transaction price must not exceed 1% of the latter.
For all other international or specified domestic transactions not classified as wholesale trading, the tolerance range is 3%.
If the variation between the determined arm's length price and the actual transaction price is within the 1% or 3% tolerance, the actual transaction price will be deemed the arm's length price.
Wholesale trading is defined as a transaction where the purchase cost of finished goods is 80% or more of the total cost, and the average monthly closing inventory is 10% or less of sales.
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Notification No : 124/2021- Income TaxPublished in Income Tax
Source : https://incometaxindia.gov.in/communications/notification/notification-no-124-2021.pdf