Ease of doing Business / Dispute resolution - Raising the threshold for specified domestic transaction

[Admin TMI]

Question - What are the proposed in Finance Bill 2015 to address the issue of compliance cost in case of small business related to domestic transaction provisions ?

[Admin TMI]

Raising the threshold for specified domestic transaction

The existing provisions of section 92BA of the Act define “specified domestic transaction” in case of an assessee to mean any of the specified transactions, not being an international transaction, where the aggregate of such transactions entered into by the assessee in the previous year exceeds a sum of five crore rupees.

In order to address the issue of compliance cost in case of small businesses on account of low threshold of five crores rupees, it is proposed to amend section 92BA to provide that the aggregate of specified transactions entered into by the assessee in the previous year should exceed a sum of twenty crore rupees for such transaction to be treated as ‘specified domestic transaction’.

This amendment will take effect from 1st April, 2016 and will, accordingly, apply in relation to the assessment year 2016-17 and subsequent assessment years.

AI Summary

Specified domestic transaction threshold raised to limit transfer pricing compliance for smaller taxpayers.
Amendment raises the monetary threshold for treating a transaction as a specified domestic transaction, so that only taxpayers whose aggregate specified transactions in the previous year exceed the new higher threshold will be captured by the domestic transfer pricing provisions, thereby reducing compliance costs for small businesses and narrowing the population required to apply domestic transfer pricing documentation and adjustments.