Safe harbour refers to the circumstances under which income tax authorities will accept the transfer price declared by the assessee without any question or scrutiny. It aims to provide a certain degree of certainty to taxpayers. A safe harbour regime will, in particular, benefit taxpayers in the services sector by adopting a transfer pricing markup in the range prescribed to avoid protracted litigation.
Now CBDT has provided rules of safe harbour for AY 2020-21 which shall remain the same. The extracts of notification is as under:
“In rule 10TD, after sub-rule (3A), the following rule shall be inserted, namely:
(3B) The provisions of sub-rules (1) and (2A) shall apply for the assessment year 2020-21.
In rule 10TE, in sub-rule (2), after the third proviso, the following proviso shall be inserted, namely:
Provided also that nothing contained in this sub-rule shall apply to the option for safe harbour validly exercised under sub-rule (3B) of rule 10TD. and
In Appendix II, in Form No 3CEFA, in the heading, in the brackets, for the word and figure “rule 10” the word, figure and letters “rule 10TE” shall be substituted.”
To read the full notification CLICK HERE.
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