Restriction on payment Specified persons u/s 40A(2) - specified domestic transaction which were subject to TPA was allowed as deduction if it was at "Arms Length Price" - Now this benefit withdrawn - such transaction shall be allowed subject to the Provisions of Section 40A(2) - Budget 2017-18 w.e.f. AY 2017-18 (Retrospective)
2 February, 2017
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Restriction on deduction for specified domestic transactions removes arm's length deduction and subjects payments to disallowance rules.
The Finance Bill 2017 amends section 40A to withdraw automatic deductibility for payments under specified domestic transactions made at Arm's Length Price; such payments are now subject to the disallowance rules of section 40A(2). The amendment also alters the proviso to clause (a) of sub section (2) consequential to the transfer pricing provision, aligning domestic specified transaction treatment with the transfer pricing framework and applying retrospectively as provided in the Bill.
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