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    Role of the Transfer Pricing Officer in Ensuring Arm’s Length Compliance : Clause 166 of the Incom...
    Reframing Arm's Length Pricing in India's Evolving Transfer Pricing Regime : Clause 165 of the Incom...
    Meaning of Specified Domestic Transactions under Clause 164 of Income Tax Bill, 2025 Vs. Section 92B...
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    Act RulesBills
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    Arm's length pricing: multi year ALP option expands certainty and permits roll forward of transfer pricing determinations.
    Clause 166 authorises the Assessing Officer to refer international and specified domestic related party transactions to a Transfer Pricing Officer for determination of the arm's length price, subject to prior approval; mandates notice, hearing, prescribed transfer pricing methods, and communication of the TPO order to AO and assessee; empowers the TPO to examine unreported transactions and to validate a taxpayer's option to apply a determined ALP to similar subsequent years, with rectification powers and corresponding AO amendment obligations, and permits issuance of Board guidelines to implement the multi year regime.
    Act RulesBills
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    Arm's length price determination: new clause refines methods and AO powers, emphasizing documentation and prescribed procedures.
    Determination of Arm's Length Price requires selecting the most appropriate method from prescribed alternatives based on the transaction's nature, associated enterprise class, and functional analysis; where a single comparable price is found it is the arm's length price subject to a prescribed tolerance, while multiple prices must be reconciled in a prescribed manner. The tax authority may determine ALP during assessment if methods were not followed or documentation is inadequate, but must issue a show cause notice before adjustment; adjustments permit recomputation of total income and restrict deductions on enhanced income, with safeguards to prevent double adjustment.
    Act RulesBills
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    Specified domestic transaction: extending transfer pricing to high-value related-party domestic dealings, subject to arm's length compliance.
    Clause 164 defines specified domestic transaction by enumerating categories of non-international related-party dealings brought under transfer pricing when aggregate annual value exceeds a high-value threshold, includes a residual prescription power to notify additional transactions, and requires contemporaneous documentation and benchmarking to ensure compliance with the arm's length principle.
    Act RulesBills
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    International transaction scope expanded broadens transfer pricing coverage to intangibles and indirect dealings, including restructuring and financing arrangements.
    Clause 163 defines international transaction expansively to include tangible and intangible property (expressly including transfer), capital financing, services, business restructuring, cost sharing and any transaction affecting profits, income, losses or assets; it reproduces an illustrative list of intangibles and contains a deeming rule treating dealings with third parties as international transactions where terms are determined with or pursuant to an associated enterprise, thereby widening transfer pricing coverage and anti avoidance reach.
    Case LawsIncome Tax
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    Presumptive taxation: partner remuneration and interest cannot be treated as individual business turnover for presumptive tax purposes.
    Section 44AD applies only where the assessee carries on an eligible business and has actual turnover or gross receipts attributable to that assessee. Remuneration and interest paid by a partnership firm to a partner arise from the firm's accounts and partnership agreement; although Section 28(v) taxes such receipts in the hands of the partner, that deeming does not convert them into the partner's turnover or gross receipts for Section 44AD. Section 40(b) governs firm deductibility but does not create an independent business activity in the partner; hence such receipts cannot be subjected to Section 44AD presumptive taxation.
    Act RulesBills
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    Associated enterprise definition expands transfer pricing scope to include specified domestic transactions and indirect control.
    Clause 162 defines associated enterprise through a general limb covering direct or indirect participation in management, control or capital and a list of deeming provisions-equity thresholds, significant loans and guarantees, board control, dependence on intangibles, supply and sales dependence, and familial/HUF control-while expressly extending the concept to specified domestic transactions and retaining prescribed catch-all and subjective influence tests that may require further guidance.
    Act RulesBills
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    Arm's length price requirement drives transfer pricing adjustments to prevent profit shifting and protect the tax base.
    Clause 161 mandates computation of income and the allowance of expenses or interest for international and specified domestic transactions among associated enterprises with reference to the arm's length price, requires arm's length allocation for shared costs or services, and prohibits transfer pricing adjustments that would reduce taxable income or increase losses, thereby strengthening scrutiny of intra group cost allocations and deductions to prevent profit shifting.
    Act RulesBills
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    Unilateral double taxation relief limits credit to the lower of domestic or foreign tax rates and requires proof of foreign tax payment.
    Clause 160 provides unilateral relief for Indian residents and non-resident partners taxed on foreign income where no DTAA exists, limited to the lower of the Indian tax rate or the foreign tax rate, requires proof of foreign tax payment, and defines key terms to include excess profits or business profits taxes; it modernizes terminology and omits a prior country-specific carve-out, while raising evidentiary and computational ambiguities.
    Act RulesBills
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    Double taxation relief framework modernised: new clause clarifies treaty adoption, anti abuse safeguards, and documentation requirements.
    Clause 159 empowers the Central Government to enter into and adopt agreements with foreign countries and notified specified territories, and permits specified domestic associations to enter into sectoral agreements subject to governmental adoption and notification. Agreements may provide relief from double taxation, avoidance of double taxation constrained by anti abuse safeguards, exchange of information to prevent evasion, and mutual assistance in tax recovery. The Act's provisions apply to the extent more beneficial to the taxpayer, but anti abuse measures in Chapter XI apply notwithstanding such benefit. Non residents must furnish a certificate of residence and prescribed documentation to claim treaty relief.
    Act RulesBills
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    Treaty interpretation and anti-abuse primacy clarified: government may adopt association agreements while preserving treaty benefit limits.
    Clause 159 authorises the Central Government to enter into agreements with foreign countries or notified territories and to adopt agreements between notified specified associations for double taxation relief, exchange of information, and mutual assistance in recovery. Taxpayers may claim the more beneficial of domestic law or a notified agreement, subject to documentary requirements for non-residents and the primacy of chapter-level anti-abuse provisions. A four-tier interpretive hierarchy for treaty terms is provided, with retrospective effect from the agreement's commencement.
    Act RulesBills
    Show AI Summary
    Relief from taxation on foreign retirement accounts aligns Indian tax timing with foreign withdrawal taxation to prevent double taxation.
    Clause 158 aligns Indian taxation of income from foreign retirement accounts with the foreign tax event by restricting relief to specified accounts in notified countries opened while the taxpayer was non resident, and by delegating timing and procedural details to rules to prevent double taxation, address timing mismatches, and guard against abuse.
    Act RulesBills
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    Relief for irregular salary receipts: claim based allocation to prior years with computation and procedures delegated to rules.
    Clause 157 provides relief where lump sum receipts (arrear or advance salary, salary for over twelve months, profits in lieu of salary, and arrears of family pension) cause an assessment at a higher rate. Relief is claim based on application to the Assessing Officer and requires allocation of amounts to earlier years; the Assessing Officer grants relief as prescribed in rules. An anti abuse exclusion denies relief where a deduction for the same amount has already been claimed, and computation, procedural steps and particulars (e.g., Form 10E practice) are to be specified by rules.
    Case LawsGST
    Show AI Summary
    Mutuality doctrine shields club-member transactions from GST; statutory deeming fiction held unconstitutional, retrospective levy invalid.
    The Kerala High Court held that the doctrine of mutuality insulates transactions between an association and its members from GST because the concepts of "supply" and "service" require distinct persons; statutory deeming provisions treating associations and members as separate persons are ultra vires Article 246A and related constitutional provisions, and retrospective application of those amendments is invalid as unfair and contrary to the rule of law.
    Act RulesBills
    Show AI Summary
    Rebate for resident individuals: expanded two-tier relief and tapered withdrawal to avoid abrupt tax cliffs.
    Clause 156 creates a two-tier rebate: a general rebate for resident individuals below a base threshold and an enhanced rebate for taxpayers opting into the new tax regime with a higher threshold and larger maximum rebate. The enhanced rebate includes a tapering mechanism for incomes above its threshold and an express cap preventing the rebate from exceeding actual tax liability, with computation rules tied to the new-regime tax rates.
    Act RulesBills
    Show AI Summary
    Rebate allowance framework modernisation - rebates applied after tax computation and capped to prevent negative tax liability.
    Allowance of rebates is enabled by Clause 155, which permits rebates to be deducted from income-tax computed on total income after tax computation and before other chapter deductions, and caps aggregate rebates so they cannot exceed the tax computed prior to rebates; the substantive conditions and limits are delegated to Section 156.
    Act RulesBills
    Show AI Summary
    Taxation of member's share: entity-level tax exempts members, unless the entity is untaxed or taxed below top rate.
    Clause 310 establishes that a member's share of income from an AOP/BOI is exempt from tax in the member's hands when the association/body is taxed on that income; if the AOP/BOI is not chargeable to tax the member's share is taxed in the member's hands; and if the AOP/BOI is taxed at the maximum marginal rate the member's share is excluded from his total income, otherwise the member's share is included in his total income.
    Act RulesBills
    Show AI Summary
    Deduction for disability: standardized tax relief retained with mandatory medical certification and prescribed certificate submission.
    Clause 154 allows resident individuals certified by a medical authority as persons with disability or severe disability to claim a fixed deduction, contingent on furnishing the prescribed certificate with the return and on certificate validity and reassessment rules; definitions are cross referenced to a Bill provision for consistency.
    Act RulesBills
    Show AI Summary
    Deduction for interest on deposits expanded to include senior citizens and time deposits, consolidating small-saver relief.
    Clause 153 provides a statutory deduction for interest on deposits to individuals, senior citizens, and HUFs, specifying eligible institutions (banks, cooperative banking societies, and post offices), preserving denial of deductions for interest held by or on behalf of firms, AOPs, or BOIs, and defining time deposits. It consolidates prior disparate provisions by including senior citizens within the same clause with expanded coverage for time deposits, while maintaining the existing deduction treatment for non senior individuals and HUFs.
    Act RulesBills
    Show AI Summary
    Patent royalty deduction for resident inventors: capped, certified relief tied to repatriated foreign receipts and compulsory licence limits.
    Clause 152 provides a statutory deduction for resident individual patentees in respect of royalty from patents registered on or after 1 April 2003, subject to a statutory annual ceiling and procedural certification. Deductions in compulsory licence cases are limited to Controller determined royalty; foreign-sourced receipts qualify only to the extent repatriated in convertible foreign exchange within the prescribed period and supported by prescribed certification. Definitions exclude capital gains and sales proceeds from the scope of "royalty," and certification by prescribed authorities is required with the return.
    Act RulesBills
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    Deduction for authors' royalty income limited by a fixed cap and repatriation plus certification requirements.
    Clause 151 grants a deduction to resident individual authors for professional income from copyright assignment or royalties for literary, artistic, or scientific books (excluding textbooks), subject to a fixed monetary cap and a royalty to sales limit for non lump sum receipts. Foreign income qualifies only if repatriated in convertible exchange within a prescribed period and accompanied by prescribed certification, and claimants must submit payer verified certificates with returns; double deduction for the same income is expressly prohibited.

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      AMENDMENTS IN THE FIRST SCHEDULE TO THE CUSTOMS TARIFF ACT, 1975

      3 February, 2020

      Contents
      Rules & Regulations
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      Budget 2020-21 + FINANCE BILL, 2020

      AMENDMENTS

      A.

      Tariff rate changes for Basic Customs Duty [to be effective from 02.02.2020] * [Clause 115 (a) of the Finance Bill, 2020]

      Rate of Duty

      S.No.

      Heading, sub-heading, tariff item

      Commodity

      From

      To

       

       

      Food processing

       

       

      1.

      0802 32 00

      Walnuts, shelled

      30%

      100%

       

       

      Chemicals

       

       

      2.

      3824 99 00

      Other Chemical products and preparations of the chemical or allied industries, not elsewhere specified

      10%

      17.5%

       

       

      Footwear

       

       

      3.

      6401, 6402,

      6403, 6404, 6405

      Footwear

      25%

      35%

      4.

      6406

      Parts of footwear

      15%

      20%

       

       

      Household Items

       

       

      5.

      6911 10, 6911 90 20, 6911 90 90

      Tableware, kitchenware, water filters (of a capacity not exceeding 40 litres) and other household articles, of porcelain of china.

      10%

      20%

      6.

      6912 00 10, 6912 00 20, 6912 00 40, 6912 00 90

      Ceramic tableware, kitchen-ware, clay articles and other household articles

      10%

      20%

      7.

      7013

      Glassware of a kind used for table, kitchen, toilet, office, indoor decoration or Similar purposes (other than that of heading 7010 or 7018)

      10%

      20%

      8.

      7323

      Table kitchen or other household articles and parts thereof, of iron or steel, iron or steel wool; pot scourers and scouring or polishing pads, gloves and the like, of iron or steel, including pressure cookers pans utensils, misc articles such as iron & steel wool, polishing pads, gloves etc.

      10%

      20%

      9.

      7418 10

      Table, kitchen or other household articles and parts thereof, of copper; pot scourers and scouring or polishing pads, gloves and the like, of copper.

      10%

      20%

      10.

      7615 10

      Table, kitchen or other household articles and parts thereof, of aluminum; pot scourer and scouring or polishing pads, gloves and the like, of aluminum.

      10%

      20%

      11.

      8301

      Padlocks and locks (key, combination or electrically operated) of base metal; Clasps and frames with clasps, incorporating locks of base metals; keys for any of the foregoing articles, of base metals (Other than lock of a kind used for automobiles.)

      10%

      20%

      12.

      9603

      Brooms, brushes, hand operated mechanical floor sweepers, not motorized, mops and feather dusters; prepared knots and tufts for broom or brush making; paint pads and rollers; Squeegees (other than roller squeegees).

      10%

      20%

      13.

      9604 00 00

      Hand sieves and hand riddles.

      10%

      20%

      14.

      9615

      Combs, hair-slides and the like, hairpins curling pins, curling grips, hair curlers and the like other than those of heading 8516 and parts thereof.

      10%

      20%

      15.

      9617

      Vacuum flasks and other vacuum vessels, complete with cases; parts thereof other than glass inners.

      10%

      20%

      16.

      8414 51 10

      Table Fans

      10%

      20%

      17.

      8414 51 20

      Ceiling Fans

      10%

      20%

      18.

      8414 51 30

      Pedestal Fans

      10%

      20%

      19.

      8414 59 20

      Blowers, Portable

      10%

      20%

      20.

      8509 40 10

      Food Grinders

      10%

      20%

      21.

      8509 40 90

      Other grinders and Mixer

      10%

      20%

      22.

      8509 80 00

      Other Appliances

      10%

      20%

      23.

      8510 10 00

      Shavers

      10%

      20%

      24.

      8510 20 00

      Hair Clippers

      10%

      20%

      25.

      8510 30 00

      Hair-removing appliances

      10%

      20%

      26.

      8516 10 00

      Water heaters and immersion heaters

      10%

      20%

      27.

      8516 21 00

      Storage heating radiators

      10%

      20%

      28.

      8516 29 00

      Other electrical space heating apparatus

      10%

      20%

      29.

      8516 31 00

      Hair Dryers

      10%

      20%

      30.

      8516 32 00

      Other hair dressing apparatus

      10%

      20%

      31.

      8516 33 00

      Hand Drying apparatus

      10%

      20%

      32.

      8516 40 00

      Electric smoothing irons

      10%

      20%

      33.

      8516 60 00

      Other ovens, cookers, cooking plates, boiling rings, grillers and roasters

      10%

      20%

      34.

      8516 71 00

      Coffee and Tea Makers

      10%

      20%

      35.

      8516 72 00

      Toasters

      10%

      20%

      36.

      8516 79 10

      Electro-thermic fluid heaters

      10%

      20%

      37.

      8516 79 20

      Electrical or electronic devices for repelling insects

      10%

      20%

      38.

      8516 79 90

      Other electro-thermic appliances used for domestic purposes

      10%

      20%

      39.

      8516 80 00

      Electric heating resistors

      10%

      20%

       

       

      Precious Metals

       

       

      40.

      7118

      Coin

      10%

      20%

       

       

      Machinery

       

       

      41.

      8414 51 40

      Railway Carriage fans

      7.5%

      10%

      42.

      8414 51 90

      Other fans with a self-contained electric motor not exceeding 125W

      7.5%

      20%

      43.

      8414 59 10

      Air Circulator

      7.5%

      10%

      44.

      8414 59 30

      Industrial fans blowers and similar blowers

      7.5%

      10%

      45.

      8414 59 9

      Other industrial fans

      7.5%

      10%

      46.

      8414 30 00, 8414 80 11

      Compressor of Refrigerator and Air conditioner

      10%

      12.5%

      47.

      8419 89 10

      Pressure vessels

      7.5%

      10%

      48.

      8418 10 10

      Commercial type combined refrigerator freezers, fitted separate external doors

      7.5%

      15%

      49.

      8418 30 10

      Commercial freezer of chest type, not exceeding 800 litre capacity

      7.5%

      15%

      50.

      8418 30 90

      Other chest type freezers

      10%

      15%

      51.

      8418 40 10

      Electrical freezers of upright type, not exceeding 800 litre capacity

      7.5%

      15%

      52.

      8418 40 90

      Other freezers of upright type, not exceeding 800 litre capacity

      7.5%

      15%

      53.

      8418 50 00

      Refrigerating or freezing display counters, cabinets, Show-cases and the like

      7.5%

      15%

      54.

      8418 61 00

      Heat pumps other than air conditioning machines

      7.5%

      15%

      55.

      8418 69 10

      Ice making machinery

      7.5%

      15%

      56.

      8418 69 20

      Water cooler

      10%

      15%

      57.

      8418 69 30

      Vending machine, other than automatic

      10%

      15%

      58.

      8418 69 40

      Refrigerating equipment/devices used in leather industry

      7.5%

      15%

      59.

      8418 69 50

      Refrigerated farm tanks, industrial ice cream freezer

      7.5%

      15%

      60.

      8418 69 90

      Others (like freezers of capacity 800 litres and more etc.]

      7.5%

      15%

      61.

      8515 (except 8515 90 00)

      Welding and Plasma cutting machines

      7.5%

      15%

       

       

      Other Electronic goods

       

       

      62.

      8504 40 (except 8404 40 21)

      Static Converters

      15%

      20%

      63.

      8504 40 21

      Dip bridge rectifier

      10%

      20%

      64.

      8517 70 10

      Populated, loaded or stuffed printed circuit boards

      10%

      20%

       

       

      Automobile and automobile parts

       

       

      65.

      8421 39 20, 8421 39 90

      Catalytic Convertor

      10%

      15%

       

       

      Furniture Goods

       

       

      66.

      9401

      Seats and parts of seats (other than aircraft seats and their parts)

      20%

      25%

      67.

      9403

      Other Furniture and parts thereof

      20%

      25%

      68.

      9404

      Mattress supports: Articles of bedding and similar furnishing

      20%

      25%

      69.

      9405

      Lamps and lighting fittings including searchlights and spotlights and pads thereof; Illuminated signs, illuminated name plates and the like, having a permanently fixed light source, and parts thereof (except solar lantern and solar lamps).

      20%

      25%

       

       

      Toys

       

       

      70.

      9503

      Tricycles, scooters, pedal-cars and similar wheeled-toys; dolls' carriages; dolls; other toys; reduced-Size (“scale”) models and similar recreational models, working or not; puzzles of all kinds

      20%

      60%

       

       

      Stationary items

       

       

      71.

      8304 00 00

      Filing, cabinets. card-index cabinets, paper-trays, paper rests, pen trays, office-stamp stands and similar office or desk equipment of base metal, Other than office furniture of heading 9403

      10%

      20%

      72.

      8305

      Fittings for loose-leaf binders or files, letter clips, letter corners, paper clips, indexing tags and similar office articles, of base metal; staples in strips (for example, for offices, upholstery, packaging), of base metal

      10%

      20%

      73.

      8310

      Sign-plates, name-plates, address-plates and similar plates, numbers, letters and other symbols, of base metal, excluding those of heading 9405

      10%

      20%

       

       

      Miscellaneous

       

       

      74.

      6702

      Artificial Flowers

      10%

      20%

      75.

      7018 10 20

      Glass Beads

      10%

      20%

      76.

      8306

      Bells, gongs, statuettes, trophies and like, non-electric of base metal; statuettes and other ornaments of base metal; photograph, picture or similar frames, of base metal; mirrors of base metal.

      10%

      20%

      B.

      New entries added to the First Schedule [to be effective from 02.02.2020] * [Clause 115(b) of the Finance Bill, 2020]

      S. No

      Tariff Item

      Description

      Tariff Rate

      Effective rate

      1.

      8414 51 50

      Wall fans

      20%

      20%

      2.

      8529 90 30

      Open cell for television set

      15%

      0%

      3.

      8541 40 11

      Solar cells, not assembled

      20%

      0%

      4.

      8541 40 12

      Solar cells, assembled in modules or made up in panels

      20%

      0%

      *Will come into effect immediately owing to a declaration under the Provisional Collection of Taxes Act, 1931.

       


      Full Text:

      Budget 2020-21 + FINANCE BILL, 2020

      Topics

      ActsIncome Tax